Exhibit 10.17
CREDIT AGREEMENT
dated as of
February 23, 2001
among
COPART, INC.,
as Borrower,
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
U.S. BANK NATIONAL ASSOCIATION
and
FLEET NATIONAL BANK,
as Lenders
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and Lead Arranger
________________________________________________________________________________
FLEET NATIONAL BANK,
Syndication Agent
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS......................................................1
SECTION 1.2. ACCOUNTING TERMS..................................................13
SECTION 1.3. LENDER DISCRETION.................................................13
SECTION 1.4. CERTAIN INTERPRETATIONS...........................................14
SECTION 1.5. HEADINGS..........................................................14
ARTICLE II
THE CREDITS
SECTION 2.1. REVOLVING REDUCING LINE OF CREDIT.................................14
(a) Revolving Reducing Line of Credit..........................14
(b) Borrowing and Repayment....................................15
SECTION 2.2. SWING LINE........................................................15
(a) Swing Line.................................................15
(b) Borrowing and Repayment....................................15
SECTION 2.3. LETTERS OF CREDIT.................................................17
(a) Letters of Credit..........................................17
(b) Existing Letters of Credit.................................19
(c) Participations.............................................19
SECTION 2.4. NOTICE OF BORROWING...............................................20
SECTION 2.5. INTEREST/FEES.....................................................21
(a) Interest...................................................21
(b) Up-Front Fee...............................................21
(c) Unused Commitment Fee......................................21
(d) Letter of Credit Fees......................................22
(e) Computation and Payment....................................22
SECTION 2.6. CONVERSION OF INTEREST OPTIONS....................................22
(a) Election...................................................22
(b) Notice to Agent............................................23
SECTION 2.7. OTHER PAYMENT TERMS...............................................23
(a) Automatic Debit............................................23
(b) Place and Manner...........................................23
(c) Date.......................................................24
(d) Default Interest...........................................24
(e) Application of Payments....................................24
(f) Failure to Pay Agent.......................................24
SECTION 2.8. PREPAYMENT........................................................24
(a) Optional Prepayments.......................................24
(b) Mandatory Reduction of Total Commitments and Repayment ....24
(c) Upon Maturity..............................................25
SECTION 2.9. FUNDING...........................................................25
(a) Lender Funding and Disbursement............................25
i
(b) Lender Failure to Fund.....................................25
(c) Lenders' Obligations Several...............................25
SECTION 2.10. PRO RATA TREATMENT................................................25
(a) Borrowings.................................................25
(b) Sharing of Payments, Etc...................................26
SECTION 2.11. GUARANTIES........................................................26
(a) Guaranties; Subordinations.................................26
(b) Certain Acknowledgments by Borrower........................26
SECTION 2.12. CHANGE OF CIRCUMSTANCES...........................................26
(a) Inability to Determine Rate................................26
(b) Illegality: Termination of Commitment.....................27
(c) Charges: Illegality.......................................27
(d) Charges: Change of Law....................................27
(e) Capital Requirements.......................................28
SECTION 2.13. TAXES ON PAYMENTS.................................................28
(a) Payments Free of Taxes.....................................28
(b) Withholding Exemption Certificates.........................28
SECTION 2.14. FUNDING LOSS INDEMNIFICATION......................................28
SECTION 2.15. LIMITATION ON REIMBURSEMENT AND INDEMNITY OBLIGATIONS.............29
SECTION 2.16. AUTHORIZED REPRESENTATIVES........................................29
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. LEGAL STATUS......................................................29
SECTION 3.2. AUTHORIZATION AND VALIDITY........................................30
SECTION 3.3. NO VIOLATION......................................................30
SECTION 3.4. LITIGATION........................................................30
SECTION 3.5. CORRECTNESS OF FINANCIAL STATEMENTS...............................30
SECTION 3.6. OTHER OBLIGATIONS; LIENS..........................................30
SECTION 3.7. PERMITS, FRANCHISES...............................................31
SECTION 3.8. ERISA.............................................................31
SECTION 3.9. ENVIRONMENTAL MATTERS.............................................31
SECTION 3.10. INCOME TAX RETURNS................................................32
SECTION 3.11. NO SUBORDINATION..................................................32
SECTION 3.12. SUBSIDIARIES AND OTHER INVESTMENTS................................32
SECTION 3.13. GOVERNMENTAL REGULATION...........................................32
SECTION 3.14. TRUTH, ACCURACY OF INFORMATION....................................32
SECTION 3.15. USE OF PROCEEDS; MARGIN REGULATIONS...............................32
SECTION 3.16. GUARANTORS........................................................33
ARTICLE IV
CONDITIONS
SECTION 4.1. CONDITIONS TO INITIAL EXTENSION OF CREDIT.........................33
(a) Approval of Agent's Counsel................................33
(b) Documentation..............................................33
(c) Financial Condition........................................34
(d) Fees and Expenses..........................................34
ii
(e) Payment of Amounts Due Under Existing Credit Agreement.....34
(f) Due Diligence..............................................34
(g) Borrower Disclosure Letter.................................34
SECTION 4.2. CONDITIONS TO EACH EXTENSION OF CREDIT............................34
(a) Notice of Borrowing........................................34
(b) Absence of Defaults........................................35
(c) Representations and Warranties.............................35
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.1. PUNCTUAL PAYMENTS.................................................35
SECTION 5.2. ACCOUNTING RECORDS................................................35
SECTION 5.3. FINANCIAL STATEMENTS..............................................35
SECTION 5.4. COMPLIANCE........................................................36
SECTION 5.5. FACILITIES........................................................36
SECTION 5.6. FINANCIAL COVENANTS...............................................37
SECTION 5.7. NOTICE TO AGENT...................................................37
SECTION 5.8. INDEMNITY OF GUARANTORS...........................................38
SECTION 5.9. INSURANCE COVERAGE................................................38
SECTION 5.10. TAXES.............................................................38
SECTION 5.11. SUBSIDIARY GUARANTIES.............................................39
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.1. USE OF FUNDS......................................................39
SECTION 6.2. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.........................39
SECTION 6.3. GUARANTEES........................................................41
SECTION 6.4. OTHER INDEBTEDNESS................................................41
SECTION 6.5. LOANS, ADVANCES, INVESTMENTS......................................42
SECTION 6.6. DIVIDENDS AND DISTRIBUTIONS.......................................43
SECTION 6.7. LIENS.............................................................43
SECTION 6.8. NO NEGATIVE PLEDGES...............................................44
SECTION 6.9. TRANSACTIONS WITH AFFILIATES......................................44
SECTION 6.10. CHANGE IN NATURE OF BUSINESS......................................44
SECTION 6.11. PREPAYMENT........................................................44
SECTION 6.12. SALE/LEASEBACKS...................................................44
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT.................................................44
SECTION 7.2. REMEDIES..........................................................47
ARTICLE VIII
THE AGENT AND RELATIONS AMONG LENDERS
iii
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES................................47
SECTION 8.2. RELIANCE BY AGENT.................................................48
SECTION 8.3. DEFAULTS..........................................................48
SECTION 8.4. INDEMNIFICATION...................................................48
SECTION 8.5. NON-RELIANCE......................................................49
SECTION 8.6. RESIGNATION OR REMOVAL OF AGENT...................................49
SECTION 8.7. AUTHORIZATION.....................................................49
SECTION 8.8. AGENT IN ITS INDIVIDUAL CAPACITY..................................49
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES...........................................................50
SECTION 9.2. EXPENSES..........................................................50
SECTION 9.3. INDEMNIFICATION...................................................50
SECTION 9.4. WAIVERS, AMENDMENTS...............................................51
SECTION 9.5. SUCCESSORS AND ASSIGNS............................................52
(a) Binding Effect.............................................52
(b) Participations.............................................52
(c) Assignments................................................53
(d) Register...................................................54
(e) Registration...............................................54
(f) Confidentiality............................................54
SECTION 9.6. SETOFF............................................................54
SECTION 9.7. ENTIRE AGREEMENT, AMENDMENT.......................................55
SECTION 9.8. NO THIRD PARTY BENEFICIARIES......................................55
SECTION 9.9. TIME..............................................................55
SECTION 9.10. SEVERABILITY OF PROVISIONS........................................55
SECTION 9.11. GOVERNING LAW.....................................................55
SECTION 9.12. SUBMISSION TO JURISDICTION........................................55
SECTION 9.13. WAIVER OF JURY TRIAL..............................................56
SECTION 9.14. COUNTERPARTS......................................................56
SECTION 9.15. AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT......................56
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SCHEDULES
Schedule I Lenders; Addresses
EXHIBITS
Exhibit A Form of Revolver Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Notice of Borrowing
Exhibit D Notice of Conversion or Continuation
Exhibit E Form of Assignment Agreement
Exhibit F Form of Subsidiary Guaranty
Exhibit G Form of Notice of Authorized Representatives
Exhibit H Form of Compliance Certificate
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THIS CREDIT AGREEMENT is entered into as of February 23, 2001 by and among
COPART, INC., a California corporation ("Borrower"), XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Xxxxx Fargo"), U.S. BANK NATIONAL ASSOCIATION and FLEET NATIONAL
BANK, and each of the other financial institutions, if any, listed on SCHEDULE I
hereto, as amended from time to time (collectively, including Xxxxx Fargo in its
capacity as a lender hereunder, "Lenders"), and Xxxxx Fargo as administrative
agent for the Lenders (in such capacity, "Agent").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of March 7, 1997
among Borrower, and Xxxxx Fargo, Fleet National Bank and U.S. Bank National
Association (formerly known as U.S. Bank of California), as "Lenders" and Xxxxx
Fargo Bank, National Association, as "Agent," (the "Existing Credit Agreement"),
the Lenders agreed to make available to Borrower the Credits as defined therein.
B. Borrower has requested that Agent and the Lenders amend and restate
the Existing Credit Agreement in its entirety and, in connection therewith, that
the Lenders make available to Borrower (a) a Revolving Reducing Line of Credit
(as hereinafter defined), the proceeds of which Borrower will use to refinance
its existing indebtedness (including, but not limited to, indebtedness under the
Existing Credit Agreement), for Permitted Acquisitions, for ongoing working
capital requirements and other general corporate purposes of Borrower and its
Subsidiaries and for the other purposes permitted hereunder, and (b)
subfacilities under the Revolving Reducing Line of Credit for the Letter of
Credit Facility and the Swing Line (as such terms are hereinafter defined).
C. Agent and the Lenders have agreed to amend and restate the Existing
Credit Agreement in its entirety in the form hereof and, in connection
therewith, the Lenders have agreed severally to make available to Borrower the
Credits (as hereinafter defined), in each case on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Agent, the Lenders and Borrower hereby amend and
restate the Existing Credit Agreement to read in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, all terms defined
above shall have the meanings set forth above, and the following terms shall
have the meanings set forth after each (with all such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition" means any transaction, or any series of related transactions,
by which any Person, in the transaction or as of the most recent transaction in
a series of transactions, directly or indirectly: (a) acquires any going concern
or all or a substantial part of the assets of any Person or any division of any
such Person; or (b) any such Person or any division of such Person becomes a
Subsidiary of such Person.
"Advance" means an extension of credit by a Lender to Borrower pursuant to
Section 2.1, 2.2 or 2.3.
1
"Affiliate," as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to vote five percent (5%) or more of the securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
or (ii) the ownership of a general partnership interest, limited partnership
interest or membership interest representing five percent (5%) or more of the
outstanding equity interest of such Person.
"Agent's Office" means (i) initially, Agent's office designated as such in
SCHEDULE I hereto, and (ii) subsequently, such other office designated as such
in writing by Agent to the Lenders and Borrower.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, as of any date of determination, the percentage
(on a per annum basis) set forth below based on the ratio of Funded Debt to
EBITDA (calculated as of each Quarterly Date for the four consecutive quarterly
periods ending on such date and adjusting on the dates set forth below):
LIBOR Base Rate Unused
Funded Debt to EBITDA Advance Advance Commitment Fee
--------------------- ------------- ----------------- --------------
greater than or equal to 2.50:1.0 2.00% 0.75% 0.30%
less than 2.50:1.0 and greater 1.75% 0.50% 0.30%
than or equal to 2.00:1.0
less than 2.00:1.0 and greater 1.50% 0.25% 0.25%
than or equal to 1.50:1.0
less than 1.50:1.0 and greater 1.25% 0.00% 0.20%
than or equal to 1.00:1.0
less than 1.00 .75% 0.00% 0.20%
Initially, the calculation of the Applicable Margin shall be based upon the
compliance certificate delivered as of the Closing Date to Agent and the Lenders
under this Agreement for the most recent
2
four quarterly periods covered thereby. Thereafter, the calculation of the
Applicable Margin shall be based upon the most recent compliance certificate
received by Agent and the Lenders pursuant to Section 5.3(c) hereof and shall be
effective from the date which is five Business Days after the date on which
Agent receive such compliance certificate until the date five Business Days
after which Agent receive the next such compliance certificate; PROVIDED,
HOWEVER, that if Agent and the Lenders do not receive a compliance certificate
within ten (10) days after the date it is required to be delivered by Section
5.3(c), for purposes of calculating the Applicable Margin the Funded Debt to
EBITDA Ratio shall be deemed, effective as of the date required by Section
5.3(c) for delivery of such certificate, to be greater than or equal to
2.50:1.0, until the date five Business Days after which Agent and the Lenders
receive such compliance certificate that indicates that a different Applicable
Margin should apply. The foregoing shall be true even though the Funded Debt to
EBITDA Ratio would have otherwise indicated a lower level if the compliance
certificate had been provided and shall be without prejudice to any other rights
or remedies of Agent or the Lenders in respect of Borrower's failure to deliver
such compliance certificate when due under Section 5.3(c).
"Applicable Lending Office" means, with respect to each Lender, (i)
initially, its office designated as such in SCHEDULE I hereto, and (ii)
subsequently, such other office or offices designated as such in writing by such
Lender to Agent, provided that in all cases such office or offices shall be
located within the United States of America or a territory thereof.
"Applicable Percentage" means, with respect to any Lender, the percentage
of the Total Commitments represented by such Bank's Proportionate Share. The
Applicable Percentage of each Lender as of the Closing Date is the percentage
set forth on SCHEDULE I.
"Assignee" has the meaning set forth in Section 9.5(c).
"Assignment" has the meaning set forth in Section 9.5(c).
"Assignment Agreement" has the meaning set forth in Section 9.5(c).
"Authorized Representatives" means those officers and employees designated
by Borrower on the most current Notice of Authorized Representatives delivered
by Borrower to Agent as being authorized to request any borrowing or make any
interest rate selection on behalf of Borrower hereunder, or to give Agent any
other notice hereunder which is designated by the terms hereof, as being made
through one of Borrower's Authorized Representatives.
"Bankruptcy Code" means the Bankruptcy Reform Act, Title 11 of the United
States Code.
"Base Rate" shall mean the higher of (a) the Federal Funds Rate plus
one-half percent (1/2%) and (b) the Prime Rate.
"Base Rate Advance" shall mean an Advance that bears interest based on the
Base Rate.
3
"Borrower Disclosure Letter" means that certain letter dated as of the date
hereof signed on behalf of Borrower and delivered to Agent on or prior to the
Closing Date.
"Business Day" means (i) for all purposes other than as covered by clause
(ii) below, any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to close in San Francisco,
California, and (ii) with respect to all notices, determinations, fundings and
payments in connection with any LIBOR Advance, any day that is a Business Day
described in clause (i) above and that also is a day for trading by and between
banks in U.S. dollar deposits in the London interbank eurocurrency market.
"Capital Leases", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
"Change in Control" means the occurrence of any of the following: (a) any
Person or two or more Persons constituting a group (as such term is used in Rule
13d-5 under the Exchange Act) acquiring by contract or otherwise beneficial
ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act),
directly or indirectly, of securities of Borrower (or other securities
immediately convertible into such securities) representing 30% or more of the
combined voting power of all securities of Borrower entitled to vote in the
election of directors; (b) any Person or two or more Persons constituting a
group (as such term is used in Rule 13d-5 under the Exchange Act) entering into
a contract or arrangement which upon consummation will result in its or their
acquisition of, or control over, securities of Borrower (or other securities
immediately convertible into such securities) representing 30% or more of the
combined voting power of all securities of Borrower entitled to vote in the
election of directors; or (c) occupation of a majority of the seats (other than
vacant seats) on the board of directors of Borrower by Persons who were neither
(i) individuals constituting Borrower's board of directors on the Closing Date,
nor (ii) any subsequent director whose election by the board of directors or
nomination for election by Borrower's stockholders was not approved by a vote of
at least a majority of the directors then in office, which directors either were
directors on the Closing Date or whose election or nomination for election was
previously so approved.
"Change of Law" means the adoption of any Governmental Rule, any change in
any Governmental Rule or the application or requirements thereof (whether such
change occurs in accordance with the terms of such Governmental Rule as enacted,
as a result of amendment or otherwise), any change in the interpretation or
administration of any Governmental Rule by any Governmental Authority, or
compliance by any Lender (or any entity controlling such Lender) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority.
"Closing Date" means the date of this Agreement.
"Credits" means the Revolving Reducing Line of Credit, the Letter of Credit
Facility and the Swing Line subfacilities.
4
"Dallas Operation Reserve" means all amounts held from time to time in the
restricted reserve account (in the amount of $250,000 as of the date hereof)
established in connection with environmental corrective actions in respect of
the Dallas Operation, as described in the SEC Documents.
"Default" means an event or condition, which, with the passage of time or
giving of notice, or both, would constitute an Event of Default.
"EBIT" means the sum, for any period, and in each instance after
eliminating all extraordinary items and determined both before and after giving
effect on a pro forma basis to any Acquisition, directly or indirectly, of any
Person by Borrower, of (a) net income (or net loss) for such period, PLUS (b) to
the extent deducted in determining net income (or loss) for such period, (i)
interest other than capitalized interest expense for such period (but including
the interest component of rental payments under Capitalized Leases) and (ii) all
accrued taxes on or measured by income.
"EBITDA" means the sum, for any period, of (a) EBIT, PLUS (b) after
eliminating all extraordinary items and determined both before and after giving
effect on a pro forma basis to any Acquisition, directly or indirectly, of any
Person by Borrower, to the extent deducted in determining net income (or loss)
for such period, all amounts treated as (i) depreciation and (ii) amortization
of goodwill and other general intangibles.
"Environmental Claim" means, with respect to any Person, any written or
oral notice, claim, demand or other communication (collectively, a "claim") by
any other Person alleging or asserting such Person's liability for investigatory
costs, cleanup costs, governmental response costs, damages to natural resources
or other property, personal injuries, fines or penalties arising out of, based
on or resulting from (i) the presence, or release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include any claim by any
Governmental Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to human
or animal health or safety or to the environment.
"Environmental Laws" has the meaning set forth in Section 3.9(a).
"ERISA" means the Employee Retirement Income Security Act of 1974,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.
"Event of Default" shall have the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing Letters of Credit" means the letters of credit issued under the
Existing Credit Agreement and outstanding for the account of Borrower on the
Closing Date.
5
"Federal Funds Rate" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate quoted to Agent on such day by three (3)
Federal funds brokers of recognized standing selected by Agent).
"Financial Institution" means any bank, savings bank, savings and loan
association or insurance company, and any affiliate of any of U.S. Bancorp,
Fleet National Bank or Xxxxx Fargo & Co. that is controlled, either directly or
indirectly, by such Person.
"Fixed Rate Term" means, with respect to any LIBOR Advance, a period
commencing on the date such LIBOR Advance is made and ending one (1), two (2),
three (3), or six (6) months thereafter, as designated by Borrower, during which
all or a portion of the Revolving Reducing Line of Credit bears interest
determined in relation to LIBOR; PROVIDED, HOWEVER, that (i) no Fixed Rate Term
may extend beyond the Maturity Date and (ii) if any Fixed Rate Term would
otherwise end on a day that is not a Business Day, that Fixed Rate Term shall be
extended to the next succeeding Business Day, unless such Business Day falls in
the next calendar month, in which case that Fixed Rate Term shall end on the
last Business Day of the current month.
"Funded Debt" means all Indebtedness of Borrower (including only
Indebtedness that is reflected or required to be reflected as a liability on the
consolidated balance sheet of Borrower in accordance with GAAP) that matures
more than one year from the date of creation or matures one year from the date
of creation but is renewable or extendible, at the option of the obligor, to a
date more than one year from the date of creation or arises under a revolving
credit or similar agreement which obligates the lender to extend credit during a
period more than one year from the date as of which Funded Debt is being
determined; PROVIDED, HOWEVER, that, regardless of whether they would otherwise
constitute "Funded Debt," neither deferred rents nor the Dallas Operation
Reserve nor Subordinated Debt shall constitute "Funded Debt" for purposes of the
Loan Documents.
"GAAP" means generally accepted accounting principles as in effect in the
United States from time to time, consistently applied.
"Governmental Approvals" means any authorization, consent, approval,
license, lease, ruling, permit, waiver, exemption, filing, registration or
notice by or with any Governmental Authority.
"Governmental Authority" means any domestic or foreign national, state or
local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.
6
"Governmental Rule" means any law, rule, regulation, ordinance, order, code
interpretation, judgment, decree, directive, guidelines, policy or similar form
of decision of any Governmental Authority.
"Guarantor" means any Subsidiary that either (i) has assets with a fair
market value in excess of $100,000, or (ii) has revenues in any fiscal year in
excess of $100,000.
"Hazardous Material" means, collectively, (a) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, and transformers
or other equipment that contain dielectric fluid containing polychlorinated
biphenyls (PCB's), (b) any chemicals or other materials or substances which are
now or hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants," "infectious wastes," "pollutants" or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which or use of which is now or hereafter prohibited,
limited or regulated under any Environmental Law.
"Indebtedness" means (i) indebtedness or liability for borrowed money; (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(iii) obligations for the deferred purchase price of property or services (but
excluding trade payables incurred in the ordinary course of business); (iv)
obligations as lessee under Capital Leases or other leases in respect of which
the lessee is treated as the owner of the leased property for tax purposes or in
connection with any transaction by which any asset is sold or otherwise
transferred to another Person and thereafter is rented or leased from such
Person with the intention to use such asset for substantially the same purpose
as its use prior to such sale or transfer; (v) reimbursement obligations under
letters of credit; and (vi) obligations, of the types described in the foregoing
clauses (i) through (v), secured by Liens, whether or not such obligations have
been assumed.
"Indemnitees" shall have the meaning set forth in Section 9.3.
"Interest Coverage Ratio" means, for any period, the ratio of (a) EBIT for
such period to (b) the aggregate of all interest in respect of Indebtedness
accrued or capitalized during such period (whether or not actually paid during
such period).
"Investments" has the meaning set forth in Section 6.5.
"Letter of Credit Documents" has the meaning given to it in Section 2.3.
"Letter of Credit Exposure" means, at any time, the aggregate amount
remaining to be drawn under all outstanding Letters of Credit; provided that the
"Letter of Credit Exposure" shall not include amounts remaining to be drawn
under Letters of Credit in respect of which credit support has been provided and
currently exists as set forth in Section 2.3(a)(v).
7
"Letter of Credit Facility" means the facility for the issuance of Letters
of Credit provided for under Section 2.3.
"Letter of Credit Obligations" mean, collectively, all reimbursement and
other obligations of Borrower in respect of Letters of Credit.
"Letters of Credit" mean the Existing Letters of Credit and the standby and
commercial letters of credit issued from time to time for the account of
Borrower by Agent, on behalf of the Lenders, as a subfacility under the
Revolving Reducing Line of Credit pursuant to Section 2.3, as the same may be
drawn on, advanced, replaced or modified from time to time.
"Leverage Ratio" means the aggregate of (i) current liabilities and
non-current liabilities, less (A) Subordinated Debt, and (B) (1) the Dallas
Operation Reserve and deferred rents; and (2) amounts held in such other
restricted reserve accounts that Majority Lenders agree in writing shall be
deducted from liabilities in determining the Leverage Ratio, divided by (ii)
Tangible Net Worth.
"LIBOR" means, for each Fixed Rate Term, the rate per annum (rounded upward
if necessary to the nearest whole l/16 of 1%) and determined pursuant to the
following formula:
BASE LIBOR
-----------------------
LIBOR = 100% - LIBOR Reserve Percentage
As used herein, (i) "Base LIBOR" means the average of the rate per annum at
which U.S. dollar deposits are offered to Agent in the London interbank
eurocurrency market on the second Business Day prior to the commencement of a
Fixed Rate Term at or about 11:00 A.M. (London time), for delivery on the first
day of such Fixed Rate Term, for a term comparable to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term shall apply, and (ii) "LIBOR Reserve Percentage"
means the reserve percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for "Eurocurrency Liabilities" (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by Agent for
expected changes in such reserve percentage during the applicable Fixed Rate
Term.
"LIBOR Advance" means an Advance that bears interest with reference to
LIBOR.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance (intended as
security), preference, priority or other security agreement or preferential
arrangement (intended as security) of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing; PROVIDED,
HOWEVER, that none of the following shall be deemed a "Lien" for purposes of the
Loan Documents: (i) a right of set-off (other than a banker's lien or similar
Lien), PROVIDED that no consensual Lien has been granted as security therefor;
nor (ii) the interest of a consignor of inventory, under a consignment that is
not a security interest, in (A) the goods consigned, or (B) the proceeds
thereof, PROVIDED that no consensual Lien has been granted in
8
such goods or proceeds; nor (iii) a financing statement filed pursuant to
Division 9 of the Uniform Commercial Code to reflect a consignment that is not a
security interest, PROVIDED that no consensual Lien has been granted in the
consigned goods or the proceeds thereof.
"Loan Availability" shall have the meaning set forth in Section 2.1(a).
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Documents, the Subsidiary Guaranties, the Borrower Disclosure Letter and each
other notice, document, contract or instrument at any time delivered to Agent
pursuant to this Agreement, any Note, any Letter of Credit Document or any
Subsidiary Guaranty.
"Majority Lenders" means the Lenders that hold at least sixty-six and
two-thirds (66-2/3%) of (a) the unpaid principal amount of all Advances under
the Credits or (b) if no Advances are then outstanding, the Total Commitments.
For purposes of clause (a), outstanding Swing Line Advances shall be deemed to
be Advances by each Lender in accordance with its Proportionate Share unless, at
the time of determination, a Lender has not timely made its Refunded Swing Line
Loan in accordance with Section 2.2(b) after request therefor by Agent.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon the
financial condition, business or properties of Borrower and its Subsidiaries,
considered as a single enterprise. The phrase "has a Material Adverse Effect,"
or "could have a Material Adverse Effect" or "will result in a Material Adverse
Effect" or words substantially similar thereto shall in all cases be intended to
mean "has resulted, or is reasonably likely to result, in a Material Adverse
Effect", and the phrase "has no (or does not have a) Material Adverse Effect" or
"will not result in a Material Adverse Effect" or words substantially similar
thereto shall in all cases be intended to mean "does not or will not or is not
reasonably likely to result in a Material Adverse Effect."
"Maturity Date" means the Business Day that immediately precedes the fifth
anniversary of the Closing Date.
"Maximum Principal Amount" shall have the meaning set forth in Section
2.1(a).
"Net Worth" means total shareholders' equity.
"Notes" mean the Revolver Notes and the Swing Line Note.
"Notice of Authorized Representatives" means a notice delivered by Borrower
to Agent which designates by name each of Borrower's Authorized Representatives
and includes each of their respective specimen signatures, in the form of
EXHIBIT G attached hereto.
"Notice of Borrowing" shall have the meaning set forth in Section 2.4.
9
"Notice of Conversion or Continuation" shall have the meaning set forth
in Section 2.6(b).
"Obligations" means, from time to time, all indebtedness or other
obligations of Borrower owing to Agent, any Lender or any Person entitled to
indemnification pursuant to Section 9.3, or any of their respective successors,
transferees or assigns, of every type and description, whether or not evidenced
by any note, guaranty or other instrument, arising under or in connection with
this Agreement, any Letter of Credit Document or any other Loan Document,
whether or not for the payment of money, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired.
"Participant" shall have the meaning set forth in Section 9.5(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"Permitted Acquisition" means any Acquisition by Borrower, either directly
or through one of its Subsidiaries, that complies in all respects with the
requirements of Section 6.2(b).
"Permitted Investments" means:
(a) (i) Marketable direct obligations, maturing within one (1)
year after the date of acquisition thereof, issued or unconditionally guarantied
by the United States of America or any agency thereof; (ii) provided in each
case that such obligation, as of the date of acquisition thereof, is rated
"investment grade" by Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc. ("Standard & Poor's"), or Xxxxx'x Investors Service, Inc. (or
the equivalent thereof by another nationally recognized rating agency): (A)
marketable direct obligations, maturing within one (1) year after the date of
acquisition thereof, issued or unconditionally guarantied by any State of the
United States or any political subdivision of such a State, or (B) commercial
paper maturing within one year after the date of acquisition thereof; (iii)
provided in each case that such obligation, as of the date of acquisition
thereof, is an obligation of a Lender, or of a commercial or investment bank
whose unsecured long-term debt obligations are rated at least A-l by Standard &
Poor's or A3 by Xxxxx'x Investors Service, Inc. (or the equivalent thereof by
another nationally recognized rating agency): (A) certificates of deposit
maturing no more than one (1) year from the date of investment therein, (B)
deposit accounts, (C) banker's acceptances eligible for rediscount under the
requirements of the Board of Governors of the Federal Reserve System, and (D)
Investments in repurchase agreements involving securities or debt obligations of
the types described in this paragraph (a); (iv) Investments in money market
programs having total invested assets in excess of $1,000,000,000, PROVIDED that
such Investment would be classified on the balance sheet of Borrower as a
current asset in accordance with GAAP; and (v) Investments in money market
preferred stocks or other equivalent Dutch-auction preferred stock of any
corporation with a credit rating, at the time of acquisition thereof, of AA+ or
aa1 or better by Standard & Poor's or Xxxxx'x Investors Service, Inc. (or the
equivalent thereof by another nationally recognized rating agency);
(b) other Investments that, at the time of acquisition thereof,
are permitted by Borrower's investment policy, as amended from time to time,
PROVIDED that such investment
10
policy (and any such amendment thereto) has been approved by Majority Lenders
(such approval not to be unreasonably withheld);
(c) Investments in any fund that invests solely in Investments
of the type permitted under the foregoing paragraphs (a) and (b) of this
definition;
(d) Investments of Persons who become Subsidiaries in a
transaction not prohibited by Section 6.2 which exist at the time such
transaction is consummated (or are made pursuant to binding commitments which
exist at such time) and which Investments (or commitments) were not made or
entered into in anticipation of such transaction;
(e) Subject to the restrictions of Section 6.6, Investments in
Borrower by any Subsidiary;
(f) (i) travel advances, employee relocation loans and other
employee loans and advances in the ordinary course of business, PROVIDED that
the aggregate principal amount of all such loans outstanding at any time shall
not exceed $1,000,000, (ii) loans to employees, officers or directors to finance
the purchase of equity securities from Borrower under either (A) a plan approved
by the board of directors of Borrower, or (B) another arrangement approved by
the board of directors of Borrower, or (iii) other loans to officers and
employees, in each case, specifically approved by the board of directors of
Borrower.
(g) (i) Investments received in connection with the bankruptcy
or reorganization of customers or suppliers, and (ii) Investments consisting of
debt obligations received in settlement of delinquent obligations of, or other
disputes with, customers or suppliers arising in the ordinary course of
business;
(h) deposit accounts (other than deposit accounts described in
paragraph (a) of this definition) maintained in the ordinary course of business
in amounts reasonably necessary for Borrower's or any Subsidiary's operating
purposes;
(i) Investments that constitute Permitted Vehicle Auction
Receivables, PROVIDED that the gross aggregate stated principal amount
outstanding of all such Investments (without reduction for any reserves taken in
connection therewith) shall not exceed at any one time the dollar amount equal
to 20% of Tangible Net Worth as of the most recent financial statements
delivered pursuant to Sections 5.3(a) and 5.3(b);
(j) Investments not otherwise permitted by Section 6.5, in an
aggregate outstanding amount not in excess of $10,000,000 at any time.
"Permitted Liens" means: (i) Liens (other than any Lien imposed under ERISA
or under any Governmental Rule relating to protection of the environment) for
taxes, assessments or charges of any Governmental Authority that are either (A)
not more than thirty (30) days delinquent, unless they are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established, to the extent required by GAAP, or (B) in respect of amounts
not in excess of
11
$100,000 in any single instance; (ii) Liens (other than any Lien imposed under
ERISA) incurred or deposits made in the ordinary course of business (including,
without limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness) or statutory obligations, and excluding in any
event consensual Liens securing either (A) any right of set-off (except as
permitted under clause (v) below), or (B) any right to payment under a
consignment of goods; (iii) Liens imposed by law, such as mechanics' liens and
other similar liens arising in the ordinary course of business, which secure
payment of obligations not more than thirty (30) days past due, unless such
obligations are being contested in good faith by appropriate proceedings and
appropriate reserves have been established, to the extent required by GAAP; (iv)
Liens arising from judgments, decrees, attachments or levies not constituting an
Event of Default under Section 7.1(f); (v) bankers' liens or other Liens that
constitute rights of set-off of a customary nature with respect to amounts on
deposit with Financial Institutions, whether arising by operation of law or by
contract, in connection with non-lending arrangements entered into with such
institutions in the ordinary course of business; and,(vi) other Liens permitted
under Section 6.7.
"Permitted Vehicle Auction Receivables" means a right to a payment of a
monetary obligation (denominated in U.S. Dollars) arising in favor of a Vehicle
Auction Finance Subsidiary that satisfies all of the following:
(a) such receivable is a fully amortizing installment loan
arising from the sale by Borrower or a Subsidiary of a new
or used vehicle to a consumer (a "financed vehicle"), the
principal balance of which does not exceed 100% of the
purchase price of such financed vehicle;
(b) each such receivable and the policies and practices relating
to the collection thereof do not and will not (A) contravene
in any material respect any state and federal laws, rules or
regulations applicable thereto in connection with the
origination or collection of thereof, including without
limitation, usury, disclosure, truth in lending, equal
credit and similar laws, the Federal Trade Commission Act,
applicable state laws governing motor vehicle installment
sale or loan contracts, and fair credit billing, fair credit
reporting and fair debt collection practices, or (B) except
as required by applicable law, impose any liability or
obligation of Borrower or any Subsidiary with respect to
such loan;
(d) at the time of origination of such receivable, the Vehicle
Auction Finance Subsidiary has conducted all of its
customary procedures relating to satisfaction of, and has
confirmed that the obligor thereunder satisfies, all of its
customary underwriting and credit policy guidelines
applicable to such loans;
12
(e) each such receivable is secured by a valid and enforceable
first priority perfected security interest of first priority
in the financed vehicle in favor of the Vehicle Auction
Finance Subsidiary;
(f) the residence of the related obligor is located within the
borders of the United States of America;
(g) at the origination date of each such receivable, the related
financed vehicle was covered by a comprehensive and
collision insurance policy (a) in an amount at least equal
to the lesser of (1) the actual cash value of the related
financed vehicle, or (2) the unpaid balance owing on such
receivable, (b) insuring against loss and damage due to
fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage,
and (c) with respect to which the Vehicle Auction Finance
Subsidiary has been named as a loss payee; and
(h) the financed vehicle with respect to such obligor has been
delivered to and accepted by such obligor.
"Person" means any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, or
any other non-governmental entity, or any Governmental Authority.
"Plan" means any defined employee pension benefit plan as defined in ERISA.
"Prime Rate" means at any time the rate of interest most recently announced
within Agent at its principal office in San Francisco as its Prime Rate, with
the understanding that the Prime Rate is one of Agent's base rates and serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto (and not necessarily the rate of interest Agent charges
to any borrower or class of borrowers), and is evidenced by the recording
thereof in such internal publication or publications as Agent may designate.
Each change in the Prime Rate will be effective on the day the change is
announced within Agent.
"Proportionate Share" means, for each Lender, the dollar amount determined
at any time by multiplying the Applicable Percentage of such Lender by the
amount of the Total Commitments at such time.
"Quarterly Dates" means the last Business Day of October, January, April
and July in each year, the first of which shall be the first such day after the
Closing Date.
"Refunded Swing Line Loans" shall have the meaning set forth in Section
2.2(b).
"Register" shall have the meaning set forth in Section 9.5(d).
13
"Responsible Officers" means each of the Chief Executive Officer, the Chief
Financial Officer and the President of Borrower.
"Revolving Reducing Line of Credit" means a credit facility available to
Borrower in the initial maximum principal amount of $100,000,000, as defined
more fully in Section 2.1.
"Revolver Note" shall mean a promissory note executed by Borrower in favor
of each Lender to evidence Advances under the Revolving Reducing Line of Credit,
substantially in the form of EXHIBIT A attached hereto.
"SEC Documents" means the Annual Report of Borrower on Form 10-K for the
fiscal year ended July 31, 2000, the Quarterly Reports of Borrower on Form 10-Q
for the quarters ended October 31, 2000, the Proxy Statement of Borrower dated
October 31, 2000, in connection with the Annual Meeting of Shareholders held on
December 5, 2000, and all other reports and documents filed with the Securities
and Exchange Commission and deemed incorporated by reference therein.
"Significant Guarantor" means any Subsidiary that would be a "significant
subsidiary" under either clause (2) or clause (3) of the definition of
"significant subsidiary" in Rule 1-02 of Regulation S-X under the Securities Act
of 1933 and the Exchange Act, as such Regulation is in effect on the date
hereof, assuming that Borrower is the "registrant" referred to in such
definition; PROVIDED that such definition shall be applied for purposes hereof
as if all references therein to "10 percent" were references to "5 percent."
"Subordinated Debt" means Indebtedness of Borrower or any Subsidiary that
has been subordinated to the Obligations, in writing, on terms and conditions
reasonably satisfactory to the Majority Lenders.
"Subsidiary" means any corporation, association, limited liability company
or other business entity of which Borrower owns directly or indirectly more than
fifty percent (50%) of the voting securities thereof or in which Borrower
otherwise owns a controlling interest.
"Subsidiary Guaranty" means each of the guaranties, in substantially the
form of EXHIBIT F attached hereto, required to be entered into by each Guarantor
in accordance with this Agreement.
"Swing Line" means a credit accommodation in the maximum principal amount
of Five Million Dollars ($5,000,000), as sublimit under the Revolving Reducing
Line of Credit, all as more fully described in Section 2.2 hereof.
"Swing Line Note" means the promissory note executed by Borrower to
evidence Advances under the Swing Line, substantially in the form of EXHIBIT B
attached hereto.
"Tangible Net Worth" means the aggregate of Net Worth plus Subordinated
Debt less any intangible assets, as determined for Borrower and its Subsidiaries
on a consolidated basis.
"Taxes" shall have the meaning set forth in Section 2.14(a).
14
"Total Commitments" means, at any time, the then aggregate amount of the
Proportionate Shares of the Lenders under this Agreement.
"Unfunded Pension Liabilities" means the excess of a Plan's accrued
benefits, as defined in Section 3(23) of ERISA, over the current value of that
Plan's assets, as defined in Section 3(26) of ERISA.
"Unused Commitment Fee" has the meaning set forth in Section 2.5(c).
"Up-Front Fee" has the meaning set forth in Section 2.5(b).
"Vehicle Auction Finance Subsidiary" means a Subsidiary that is in the
business of providing financing to facilitate the purchase of vehicles sold by
Borrower or its Subsidiaries, holds all applicable licenses and permits,
including any finance lender licenses relating to consumer finance transactions,
and is at all applicable times in material compliance with all Governmental
Rules required in connection therewith.
SECTION 1.2. ACCOUNTING TERMS.
Any accounting terms used in this Agreement which are not specifically
defined shall have the meanings customarily given them in accordance with GAAP.
Unless otherwise expressly provided, all calculations of financial ratios or
other amounts with respect to Borrower shall be determined on a consolidated
basis in accordance with GAAP. Unless otherwise expressly provided, all
references to the "principal amount" or the "amount" of any Indebtedness
(expressly or by implication) shall mean the principal amount of such
Indebtedness, determined in accordance with GAAP.
SECTION 1.3. LENDER DISCRETION. In each case where the consent or approval
of Agent, all Lenders or Majority Lenders is required, or their non-obligatory
action is requested by Borrower, then, unless otherwise specifically indicated,
such consent, approval or action shall be in the sole and absolute discretion of
Agent and, as applicable, each Lender, exercised in good faith.
SECTION 1.4. CERTAIN INTERPRETATIONS. Unless the context otherwise clearly
requires: any time the word "or" is used herein, it has the inclusive meaning
represented by the phrase "and/or;" "includes" and "including" shall not be
limiting; and "all" shall include "any" and "any" shall include "all." The words
"hereof," "herein," "hereby," "hereunder," and similar terms refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, paragraph, subparagraph, clause, exhibit and
schedule references are to this Agreement unless otherwise specified. Any
reference in this Agreement to this Agreement or to any other Loan Document
includes any and all amendments, modifications, supplements, renewals or
restatements thereto or thereof, as applicable. References to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to.
15
SECTION 1.5. HEADINGS. Headings in this Agreement and each of the other
Loan Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
ARTICLE II
THE CREDITS
SECTION 1.6. REVOLVING REDUCING LINE OF CREDIT.
(1) REVOLVING REDUCING LINE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Lender hereby severally agrees, on a pro rata
basis, to make Advances to Borrower under the Revolving Reducing Line of Credit
from time to time on any Business Day during the period from the Closing Date to
the Maturity Date, not to exceed at any time outstanding such Lender's
Proportionate Share of (x) during any period set forth below the applicable
maximum amount ("Maximum Principal Amount") set forth for such period (all dates
inclusive), LESS (y) the sum of (A) all Advances outstanding at such time under
the Swing Line and (B) the Letter of Credit Exposure at such time (the aggregate
amount of such difference at any time, the "Loan Availability");
Closing Date through 05/31/2003 $100,000,000
06/01/2003 through 08/31/2003 95,000,000
09/01/2003 through 11/30/2003 90,000,000
12/01/2003 through 02/29/2004 85,000,000
03/01/2004 through 05/31/2004 80,000,000
06/01/2004 through 08/31/2004 75,000,000
09/01/2004 through 11/30/2004 70,000,000
12/01/2004 through 02/28/2005 65,000,000
03/01/2005 through 05/31/2005 60,000,000
06/01/2005 through 08/31/2005 55,000,000
09/01/2005 through 11/30/2005 50,000,000
12/1/2005 through Maturity Date 45,000,000
The proceeds of the initial Advance under the Revolving Reducing Line of
Credit shall be used to refinance all existing Indebtedness under the Existing
Credit Agreement (other than in respect of the Existing Letters of Credit), and
the proceeds of all Advances under the Revolving Reducing Line of Credit shall
be used (i) to refinance certain existing Indebtedness of Borrower; (ii) to
finance all or a portion of the costs of Permitted Acquisitions by Borrower,
either directly or through one or more Subsidiaries; and (iii) for the working
capital and other general corporate purposes of Borrower and the Subsidiaries.
Borrower's obligation to repay Advances under the
16
Revolving Reducing Line of Credit shall be evidenced by the Revolver Notes, all
terms of which are incorporated herein by this reference.
(2) BORROWING AND REPAYMENT. Borrower may from time to time during
the term of the Revolving Reducing Line of Credit borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all the limitations,
terms and conditions contained herein; PROVIDED, HOWEVER, that the sum of the
total outstanding borrowings under the Revolving Reducing Line of Credit PLUS
the Letter of Credit Exposure PLUS all outstanding borrowings under the Swing
Line shall not at any time exceed the applicable Maximum Principal Amount. If at
any time the principal amount of such total outstanding borrowings (including
Swing Line borrowings), for any reason whatsoever, shall exceed the difference
between the applicable Maximum Principal Amount and the sum of all outstanding
borrowing under the Swing Line and the Letter of Credit Exposure, the amount of
such excess shall be immediately due and payable.
SECTION 1.7. SWING LINE.
(1) SWING LINE. Subject to the terms and conditions of this
Agreement, Agent hereby agrees to make a portion of the Revolving Reducing Line
of Credit available to Borrower by making Base Rate Advances under the Swing
Line up to and including the date which is the Business Day immediately
preceding the Maturity Date, the proceeds of which shall be used as described in
Section 2.1 hereof. Each of the Lenders severally agrees to make Base Rate
Advances to effect repayment of, or to purchase participations in, such Swing
Line Advances not voluntarily repaid by Borrower on or before the due date
thereof, as provided herein.
(2) BORROWING AND REPAYMENT. Borrower, through one of its Authorized
Representatives, may from time to time during the term of the Swing Line, by
written request or telephonic request promptly confirmed in writing, specifying
the principal amount of the requested borrowing, such request to be received by
Agent no later than 10:00 a.m. (San Francisco time), or such later time as Agent
may agree, on the date of such borrowing, borrow, partially or wholly repay
outstanding borrowings and reborrow, subject to all of the limitations, terms
and condition contained herein; PROVIDED, HOWEVER, that:
(1) no Advance under the Swing Line shall be available if the
principal amount of such Advance, when added to the principal balance
outstanding under the Swing Line and the principal balance outstanding
under the Revolving Reducing Line of Credit, would exceed the Total
Commitments available as of the date of such Advance;
(2) no Advance under the Swing Line shall be available if the
principal amount of such Advance, when added to the principal balance
outstanding under the Swing Line, would exceed Five Million Dollars
($5,000,000); and
(3) both before and immediately after giving effect to any such
Advance under the Swing Line, each of the conditions set forth in Sections
4.2(b) and (c) shall have been and remain satisfied.
17
(4) All outstanding Advances under the Swing Line, if not repaid
or refunded earlier, shall be due and payable on the date that is the
earlier of (A) ten (10) Business Days following the date of such Swing Line
Advance and (B) the Maturity Date.
With respect to any Advance under the Swing Line that has not been
voluntarily repaid by Borrower, Agent may, at any time in its sole and absolute
discretion, whether or not any Swing Line Advance is then due from Borrower,
deliver to each Lender (with a copy to Borrower), a notice (which shall be
deemed to be a Notice of Borrowing given by Borrower) requesting the Lenders to
make Base Rate Advances under the Revolving Reducing Line of Credit according to
their respective Proportionate Shares in an aggregate amount equal to the amount
of such Advances under the Swing Line (the "Refunded Swing Line Loans")
outstanding on the date such notice is given. Agent shall give such notice to
the Lenders at least one (1) Business Day prior to the date on which such Base
Rate Advance is to be made. In the event that Borrower determines to repay
voluntarily any Advance under the Swing Line, Borrower shall notify Agent of its
intention no later than 10:00 a.m. (San Francisco time) on any Friday (or, if
such day is not a Business Day, on the next succeeding Business Day) and no
later than 1:00 p.m. (San Francisco time) on any other Business Day. Anything
contained in this Agreement to the contrary notwithstanding, (i) the proceeds of
such Base Rate Advances made by the Lenders other than Xxxxx Fargo shall be
immediately delivered by each Lender to Agent (and not to Borrower) and applied
to repay a corresponding portion of the Refunded Swing Line Loans and (ii) on
the day such Base Rate Advances are made, Xxxxx Fargo's Proportionate Share of
such Base Rate Advances shall be deemed to be paid with the proceeds of the
Advance under the Swing Line made by Agent and such portion of Advances under
the Swing Line deemed to be so paid shall no longer be outstanding under the
Swing Line, shall no longer be due under the Swing Line Note and shall be due
under the Revolver Notes. Borrower hereby authorizes Agent to charge any of
Borrower's demand deposit accounts held with Agent in order to pay immediately
to Agent the amount of the Refunded Swing Line Loans to the extent the proceeds
of such Base Rate Advances made by the Lenders, including the Base Rate Advance
deemed to be made by Xxxxx Fargo, are not sufficient to repay in full the
Refunded Swing Line Loans. If any portion of an amount paid (or deemed to be
paid) to Agent under the Swing Line Note should be recovered by or on behalf of
Borrower from Agent in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be shared among all Lenders
ratably in accordance with their respective Proportionate Shares hereunder.
If, as a result of any bankruptcy or similar proceeding with respect to
Borrower, Base Rate Advances under the Revolving Reducing Line of Credit are not
made pursuant to this Section 2.2(b) in an amount sufficient to repay any
amounts owed to Agent in respect of any outstanding Advances under the Swing
Line, each Lender shall be deemed to have purchased and hereby agrees to
purchase a participation in such outstanding Advances under the Swing Line in an
amount equal to the unpaid amount together with accrued interest thereon
multiplied by such Lender's Applicable Percentage. Upon one (1) Business Day's
notice from Agent, each Lender shall deliver to Agent an amount equal to its
respective participation in same day funds at the office of Xxxxx Fargo Bank
Agency Department located at 000 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000 (or such other address designated from time to time by Agent).
In the event any Lender fails to make available to Agent the amount of such
Lender's participation as provided in this paragraph, interest shall accrue
18
on the amount due at the daily Federal Funds Rate for a period ending on the
third Business Day following the date such amount was due, and at the Prime Rate
thereafter.
Anything contained herein to the contrary notwithstanding, (i) each
Lender's obligation to make Base Rate Advances under the Revolving Reducing Line
of Credit for the purpose of repaying any Refunded Swing Line Loans and each
Lender's obligation to purchase a participation in any unpaid Advances under the
Swing Line shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation (a) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Agent,
Borrower, any other Lender or any other Person for any reason whatsoever; (b)
the occurrence or continuance of an Event of Default or Default; (c) any adverse
change in the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Borrower; (d) any breach of this Agreement or any
other Loan Document by any party thereto; or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
and (ii) Agent shall not be obligated to make any Advances under the Swing Line
if it has elected not to do so after the occurrence and during the continuation
of a Default or Event of Default.
SECTION 1.8. LETTERS OF CREDIT.
(1) LETTERS OF CREDIT.
(1) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time prior to the Maturity Date,
Agent shall issue such Letters of Credit for the account of Borrower as
Borrower may request, provided that (A) upon issuance of any such Letter of
Credit: (1) the sum of the aggregate outstanding principal amount of all
Advances (including Swing Line Advances) plus the Letter of Credit Exposure
shall not exceed the applicable Maximum Principal Amount; (2) the Letter of
Credit Exposure shall not exceed $5,000,000; and (3) unless the Lenders
otherwise unanimously consent in writing and subject to paragraph (v) of
this Section 2.3(a), the term of any Letter of Credit shall not extend
beyond the earlier of (A) the first anniversary of the issuance thereof and
(B) the Maturity Date. Unless the context otherwise requires: (x) all
references herein to "the outstanding principal balance of the Advances" or
similar references shall be deemed to include, for all purposes, the Letter
of Credit Exposure; and (y) each reference herein to an "Advance" or a
"borrowing" shall include both the issuance of a Letter of Credit and
(except with respect to conditions precedent to the making of Advances) the
payment of any draw thereunder by Agent, as appropriate.
(2) Borrower, through one of its Authorized Representatives,
shall deliver to Agent a duly executed request for Letter of Credit not
later than 9:00 A.M. (San Francisco time), at least one (1) Business Day
prior to the date upon which the requested Letter of Credit is to be
issued. Borrower shall further execute and deliver to Agent such additional
instruments and documents as Agent may reasonably require, in conformity
with the then standard practices of Agent's letter of credit department
relating to letters of credit comparable to the requested Letter of Credit,
in connection with the issuance of such Letter of Credit (collectively, the
"Letter of Credit Documents"); PROVIDED that if any of the terms
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of the Letter of Credit Documents are inconsistent with the terms of this
Agreement then the terms of this Agreement shall control unless Borrower, Agent
and the Lenders expressly agree otherwise.
(3) Agent shall, if the requested form of such Letter of Credit
and the identity and location of the proposed beneficiary thereof are reasonably
acceptable to Agent consistent with Agent's established policies generally
applicable to the issuance of letters of credit and applicable law, and subject
to the conditions set forth in Section 4.2 (and, if applicable, Section 4.1),
issue the Letter of Credit on or before 2:00 P.M. (San Francisco time), on or
before the day one (1) Business Day following receipt of the documents last due
pursuant to subsection (ii) above.
(4) If and to the extent that any amounts are drawn under any
Letter of Credit, then, unless prior to the date such draw is to be funded (A)
Borrower notifies Agent that Borrower intends to reimburse Agent for such draw
and on or before the date such draw is to be funded and, on or before the date
such draw is funded, Borrower does reimburse Agent in full therefor, in
immediately available funds; or (B) Borrower authorizes Agent to reimburse
itself on the date of such draw by debiting one or more accounts of Borrower
maintained with Agent and, on the date of such draw, sufficient funds are
available in such designated account(s) to reimburse Agent in full the amount so
drawn, the amounts so drawn under such Letter of Credit shall be considered an
Advance for all purposes hereunder as of the date of such draw, accruing
interest, initially, at a rate determined in accordance with Section 2.5(a)(i),
the proceeds of which were applied to reimburse Agent for the payment made by it
under the Letter of Credit.
(5) (A) Upon the occurrence of the Maturity Date (or earlier
acceleration of the Advances or termination of the Lenders' commitments
hereunder) prior to the expiration of all Letters of Credit, Borrower shall
promptly provide to Agent a standby letter of credit in favor of Agent, issued
by a bank reasonably satisfactory to Majority Lenders and in form and substance
reasonably satisfactory to Agent, in a face amount equal to the Letter of Credit
Exposure on that date, or shall immediately make other provisions reasonably
satisfactory to Majority Lenders for the full collateralization, by cash or cash
equivalent, of all such outstanding Letters of Credit.
(1) If, as of the date of any reduction in the Revolving
Reducing Line of Credit, the Letter of Credit Exposure exceeds the
difference between the Maximum Principal Amount and the aggregate
outstanding principal balance of the Advances (including Swing Line
Advances) as of such date, Borrower shall promptly provide to Agent a
standby letter of credit in favor of Agent, issued by a bank reasonably
satisfactory to Majority Lenders and in form and substance reasonably
satisfactory to Majority Lenders, in a face amount equal to the amount of
such excess, or shall immediately make other provisions reasonably
satisfactory to Majority Lenders for the full collateralization, by cash or
cash equivalent, of the amount of such excess.
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(2) Upon the failure of Borrower to comply with the
requirements of either of the foregoing paragraphs, such portion of the
Letter of Credit Exposure as to which Borrower has failed to comply shall
be deemed to be immediately due and payable.
(6) The issuance of any supplement, modification, amendment, renewal
or extension to or of any Letter of Credit shall be treated in all respects the
same as the issuance of a new Letter of Credit, PROVIDED that the fees provided
for in the first sentence of Section 2.5(d) shall not be affected by any
amendment that does not change the amount available to be drawn under, or the
expiration date of, the affected Letter of Credit.
(7) Borrower assumes all risks as to the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither Agent nor any Lender, nor any of its or their
respective officers or directors, shall be liable or responsible for, nor shall
Borrower's obligations hereunder in respect of any Letter of Credit be impaired
as a result of:
(1) any lack of validity or enforceability of any Letter of
Credit or any Letter of Credit Document;
(2) the use that may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection therewith;
(3) any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(4) the existence of any claim, set-off, defense or other right
that Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), any Lender or any other
Person, whether in connection with the transactions contemplated by the
Letter of Credit Documents or any unrelated transaction;
(5) payment by Agent against presentation of documents that do
not comply with the terms of a Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of
Credit; or
(6) any other circumstance whatsoever in making or failing to
make payment under any Letter of Credit.
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In furtherance and not in limitation of the foregoing, Agent may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Notwithstanding the foregoing, Borrower may have a claim against Agent, and
Agent may be liable to Borrower, to the extent of any direct (as opposed to
consequential or exemplary) damages suffered by Borrower caused by Agent's
wilful misconduct or gross negligence.
(2) EXISTING LETTERS OF CREDIT. Borrower hereby requests that the
Existing Letters of Credit, which are described on SCHEDULE 2.3(B) to the
Borrower Disclosure Letter, be deemed Letters of Credit issued hereunder;
PROVIDED, HOWEVER, that nothing in this Section 2.3(b) shall extend the expiry
date of any Existing Letter of Credit. Each of Agent and the Lenders
acknowledges and agrees that the Existing Letters of Credit constitute Letters
of Credit outstanding under this Agreement on and as of the Closing Date. The
Lenders hereby severally and unconditionally agree to participate in the
Existing Letters of Credit under the terms of Section 2.3(c) as of the Closing
Date.
(3) PARTICIPATIONS. Immediately upon the issuance of each Letter of
Credit (and, in respect of any Existing Letter of Credit, as of the Closing
Date), Agent shall be deemed irrevocably to have sold and transferred to each
Lender without recourse or warranty, and each Lender (other than Agent) shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase and
accept from Agent, for such Lender's own account and risk, an undivided interest
and participation in such Letter of Credit and each drawing thereunder in an
amount equal to the product of (i) the Applicable Percentage of such Lender,
multiplied by (ii) the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively. For purposes of subsection
2.3(a), each issuance of a Letter of Credit shall be deemed to utilize that
portion of the Proportionate Share of each Lender by an amount equal to the
amount of such participation.
SECTION 1.9. NOTICE OF BORROWING. Borrower, through one of its Authorized
Representatives, shall request each Advance under the Revolving Reducing Line of
Credit by giving Agent irrevocable written notice or telephonic notice
(confirmed promptly in writing), in the form of EXHIBIT C attached hereto (each,
a "Notice of Borrowing"), which specifies, among other things:
(1) the principal amount of the requested Advance, which for any Base
Rate Advance shall be in a minimum amount of $500,000 or any multiple of
$100,000 in excess thereof, and for any LIBOR Advance shall be in a minimum
amount of $3,000,000 or any multiple of $1,000,000 in excess thereof;
(2) a short description of the proposed use of the proceeds thereof,
and, if the proceeds of such Advance are to be used to finance all or any part
of an Acquisition, enclosing the Responsible Officer's certificate required
pursuant to Section 6.2(b)(ii):
(1) a description of the Acquisition to be financed with the
proceeds thereof,
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(2) copies of the related documentation (to the extent
available, but including at least the relevant purchase or acquisition
agreement),
(3) if the aggregate Advances being used to finance all or any
portion of such Acquisition exceed (A) $20,000,000, if such Acquisition
involves a business substantially similar to Borrower's business as of the
date of this Agreement, or (B) $10,000,000, if such Acquisition does not
involve a business substantially similar to Borrower's business as of the
date of this Agreement (unless Majority Lenders have waived delivery
thereof, based on such other information as may have been provided to the
Lenders with respect to such Acquisition): calculations, based on pro forma
financial statements of Borrower as of the end of the most recently
completed fiscal quarter of Borrower giving pro forma effect to such
Acquisition as of such date confirming on a pro forma basis Borrower's
compliance with the financial covenants of Section 5.6 as of the end of
such most recently completed fiscal quarter notwithstanding such
Acquisition (PROVIDED that the financial covenants otherwise required to be
tested as of the end of each fiscal year shall be calculated on the basis
of the twelve-month period ended as of the most recent Quarterly Date),
(3) the proposed date of borrowing, which shall be a Business Day;
(4) the interest rate option applicable to such borrowing, which, with
respect to any Swing Line Advance shall be the Base Rate; and
(5) with respect to any requested LIBOR Advance, the Fixed Rate Term
applicable thereto.
Each such Notice of Borrowing must be received by Agent not later than
10:00 a.m. (San Francisco time) (A) at least one (1) Business Day prior to the
date of borrowing for a Base Rate Advance (other than a Swing Line Advance), (B)
on the Business Day of the borrowing for a Swing Line Advance, and (C) at least
three (3) Business Days prior to the date of borrowing for a LIBOR Advance.
Other than with respect to Swing Line Advances, Agent shall promptly notify each
Lender of the contents of each Notice of Borrowing and of the amount of the
Advance to be made by such Lender.
SECTION 1.10. INTEREST/FEES.
(1) INTEREST.
(1) REVOLVING REDUCING LINE OF CREDIT. Subject to Section 2.6(a)
hereof, the outstanding principal balance of the Revolving Reducing Line of
Credit (except with respect to the Swing Line) shall bear interest in
accordance with the following interest rate options, as designated by
Borrower:
(1) for Base Rate Advances, at a fluctuating rate per annum
equal to the Base Rate in effect from time to time plus the Applicable
Margin; and
23
(2) for LIBOR Advances, at a fixed rate per annum
determined by Agent to be LIBOR in effect on the first day of a Fixed
Rate Term plus the Applicable Margin.
(2) SWING LINE. The outstanding principal balance of the Swing
Line shall bear interest at a fluctuating rate per annum equal to the Base
Rate in effect from time to time plus the Applicable Margin.
(3) CHANGES IN RATES. When interest is determined in relation to
the Base Rate, each change in the rate of interest shall become effective
on the date each Prime Rate change is announced within Agent. Each change
in the Applicable Margin shall occur as provided in the definition of
Applicable Margin.
(4) AGGREGATE FIXED RATE TERMS. Notwithstanding anything to the
contrary contained herein, Borrower may not have, in the aggregate, more
than eight (8) different Fixed Rate Terms in respect of LIBOR Advances
outstanding at any one time.
(2) UP-FRONT FEE. Borrower shall pay to Agent, for the ratable
benefit of the Lenders, a commitment fee in respect of the Total Commitments
equal to $150,000 (the "Up-Front Fee"). Agent acknowledges receipt of $56,000 of
the Up-Front Fee. The remaining balance of the Up-Front Fee shall be due and
payable, and fully earned on the Closing Date. Once paid, the Up-Front Fee and
any portion thereof shall be nonrefundable under any circumstance.
(3) UNUSED COMMITMENT FEE. From and after the Closing Date and until
the Maturity Date (or earlier acceleration of the Loans or termination of the
Lenders' commitments hereunder), Borrower shall pay to Agent, for the ratable
benefit of the Lenders, an unused commitment fee (the "Unused Commitment Fee")
equal to the product of (i) the Unused Amount for any fiscal quarter of Borrower
multiplied by (ii) the Unused Commitment Fee Applicable Margin for such fiscal
quarter. The "Unused Amount" means, for the period from the Closing Date through
the initial Quarterly Date occurring after the Closing Date and for each
successive period ending thereafter on a Quarterly Date until the next
succeeding Quarterly Date or the Maturity Date, an amount calculated by Agent
equal to (i) the average daily amount of the Maximum Principal Amount during
period such minus (ii) the average daily principal balance of all Advances
(excluding for such calculation all Swing Line Advances outstanding during such
period, but including the Letter of Credit Exposure). The Unused Commitment Fee
shall be payable, in the manner provided in Section 2.7(a), in arrears for the
preceding period on each Business Day that the Applicable Margin is calculated
as provided in the definition of Applicable Margin with the final payment to be
made on the Maturity Date. The Unused Commitment Fee shall accrue at all times
from and after the Closing Date, including at any time during which one or more
conditions in Article IV are not met.
(4) LETTER OF CREDIT FEES. As additional consideration for the
issuance, extension or renewal of Letters of Credit pursuant to Section 2.3,
Borrower agrees to pay to Agent, for the ratable benefit of the Lenders, a fee,
calculated (i) with respect to each commercial Letter of Credit, at the rate of
one and one-quarter percent (1.25%) per annum for the term thereof, on the face
24
amount of such commercial Letter of Credit (but in no event less than $200) and
(ii) with respect to each standby Letter of Credit, at the rate equal to the
Applicable Margin for LIBOR Advances as of the date of issuance of such Letter
of Credit, per annum for the term thereof, on the undrawn portion thereof
(which, on the issuance date shall be the face amount of such standby Letter of
Credit. Such fees shall be payable upon issuance (and, in the event of any
extension or renewal of a Letter of Credit, upon such extension or renewal, for
the term thereof). In addition, Borrower shall pay Agent all transfer,
negotiation, amendment and similar fees normally charged by Agent in accordance
with Agent's then current fee policy in connection with standby or commercial
letters of credit, as applicable.
(5) COMPUTATION AND PAYMENT. All interest and fees shall be computed
on the basis of a 360-day year, actual days elapsed, with the exception of Base
Rate interest calculations, which shall be computed on the basis of a
365/366-day year, actual days elapsed. Accrued interest on Base Rate Advances
(including Swing Line Advances) shall be payable in arrears on the last Business
Day of each month. Accrued interest on LIBOR Advances shall be payable in
arrears on the last day of each Fixed Rate Term applicable to such LIBOR
Advance; PROVIDED, HOWEVER, that if any Fixed Rate Term for a LIBOR Advance
exceeds three months, interest accrued to the date of payment on that LIBOR
Advance shall also be paid in arrears on the date which falls three months after
the beginning of that Fixed Rate Term. Notwithstanding the foregoing, accrued
interest on any Advance shall be due and payable on the date of its conversion
from a Base Rate Advance to a LIBOR Advance or from a LIBOR Advance to a Base
Rate Advance pursuant to Section 2.6.
SECTION 1.11. CONVERSION OF INTEREST OPTIONS.
(1) ELECTION. Subject to (i) the minimum dollar requirements set
forth in Section 2.4(a), (ii) the limitations on LIBOR Advances under Section
2.5(a)(iv), and (iii) the requirements that (A) as of the first day of any Fixed
Rate Term requested by Borrower, there shall not have occurred and be continuing
any Event of Default, and (B) as of the first day of any Fixed Rate Term in
excess of one (1) month, there shall not have occurred and be continuing any
Default: (1) at any time any portion of the Revolving Reducing Line of Credit
bears interest determined in relation to the Base Rate, Borrower may convert all
or any portion thereof so that it bears interest determined in relation to LIBOR
for a Fixed Rate Term designated by Borrower, and (2) at any time any portion of
the Revolving Reducing Term-Line of Credit bears interest determined in relation
to LIBOR, Borrower may convert all or a portion thereof at the end of the Fixed
Rate Term applicable thereto so that it bears interest determined in relation to
the Base Rate or in relation to LIBOR for a new Fixed Rate Term designated by
Borrower. If Borrower has not delivered the required interest rate conversion or
continuation election at least three (3) Business Days prior to the last day of
any Fixed Rate Term and, as of the last day of such Fixed Rate Term, no Event of
Default has occurred and is continuing, Borrower shall be deemed to have made an
election to have the amounts subject thereto earn interest at a rate determined
in relation to LIBOR for a new Fixed Rate Term (x) of one (1) month if, as of
the last day of such Fixed Rate Term, there shall have occurred and be
continuing a Default, or (y) in any other case, of the same duration as such
expiring Fixed Rate Term. As of the last day of any Fixed Rate Term with respect
to which Borrower has not delivered a notice making a Base Rate selection for
the amounts subject thereto, Borrower shall be deemed to have represented and
warranted to Agent and the Lenders that no Event of Default has occurred and is
continuing.
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As of the last day of any Fixed Rate Term of more than one (1) month with
respect to which Borrower has not delivered a notice either making a Base Rate
selection for the amounts subject thereto or selecting a new Fixed Rate Term of
one (1) month therefor, Borrower shall be deemed to have represented and
warranted to Agent and the Lenders that no Default has occurred and is
continuing.
(2) NOTICE TO AGENT. Borrower, through one of its Authorized
Representatives, shall request each interest rate conversion or continuation by
giving Agent irrevocable written notice or telephonic notice (confirmed promptly
in writing), in the form of EXHIBIT D attached hereto (a "Notice of Conversion
or Continuation"), which specifies, among other things:
(1) the principal amount which is the subject of such conversion
or continuation;
(2) the proposed date of such conversion or continuation, which
shall be a Business Day; and
(3) if such Notice pertains to a LIBOR interest selection, the
length of the applicable Fixed Rate Term.
Any such Notice of Conversion or Continuation must be received by Agent not
later than 10:00 a.m. (San Francisco time), at least three (3) Business Days
prior to (x) the last day of any then-existing Fixed Rate Term to be affected
thereby, or (y) the effective date of any LIBOR interest selection made therein,
as applicable. Agent shall promptly notify each Lender of the contents of each
such Notice of Conversion or Continuation, or if timely notice is not received
from Borrower prior to the last day of any Fixed Rate Term of the automatic
conversion of the amounts subject thereto (if any) to a Base Rate Advance.
SECTION 1.12. OTHER PAYMENT TERMS.
(1) AUTOMATIC DEBIT. Agent shall, and Borrower hereby authorizes
Agent to, debit a deposit account of Borrower with Agent, specifically
identified by Borrower to Agent for such purposes (but subject to change by
mutual agreement of Borrower and Agent, PROVIDED that at all times there shall
be at least one such deposit account so identified), for all payments of
interest and fees as they become due on any of the Credits. Should, for any
reason whatsoever, the funds in any such deposit account be insufficient to pay
all interest or fees when due, Borrower shall, immediately upon demand, remit to
Agent the full amount of any such deficiency.
(2) PLACE AND MANNER. Borrower shall make all payments due to each
Lender under the Loan Documents by payment to Agent at Agent's Office, for the
account of such Lender, in lawful money of the United States and in same day or
immediately available funds not later than 12:00 noon (San Francisco time) on
the date due. Agent shall promptly disburse to each Lender at such Lender's
Applicable Lending Office each such payment received by Agent for such Lender.
26
(3) DATE. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(4) DEFAULT INTEREST. From and after the Maturity Date, or such
earlier date as all principal owing under the Revolving Reducing Line of Credit
becomes due and payable, by acceleration or otherwise, the outstanding principal
balance thereof shall bear interest until paid in full at an increased rate per
annum (computed in accordance with Section 2.5(e)) equal to two percent (2%)
above the rate of interest from time to time applicable thereto.
(5) APPLICATION OF PAYMENTS. All payments under the Loan Documents
(including prepayments) shall be applied first to unpaid fees, costs and
expenses then due and payable under this Agreement and the other Loan Documents,
second to accrued interest then due and payable under the Loan Documents, and
finally to reduce the principal amount of outstanding Advances. If no Event of
Default has occurred and is continuing, Agent shall, subject to the preceding
sentence, apply all payments to be applied to Borrower's obligations as directed
by Borrower. If an Event of Default has occurred and is continuing or if
Borrower fails to direct application, Agent shall apply such payments as
determined by it in its discretion.
(6) FAILURE TO PAY AGENT. Unless Agent shall have received notice
from Borrower at least one (1) Business Day prior to the date on which any
payment is due to the Lenders hereunder that Borrower will not make such payment
in full, Agent may assume that Borrower has made such payment in full to Agent
on such date and Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrower shall not have made such payment
in full to Agent, such Lender shall repay to Agent forthwith on demand such
amount distributed to such Lender, together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to Agent, at the Federal Funds Rate. A notice of Agent
submitted to any Lender with respect to any amounts owing by such Lender under
this Section 2.7(f) shall be presumptive evidence of such amounts.
SECTION 1.13. PREPAYMENT.
(1) OPTIONAL PREPAYMENTS. Borrower may, through one of its Authorized
Representatives and upon at least one (1) Business Day's prior written notice to
Agent if for a Base Rate Advance, and three (3) Business Days' prior written
notice to Agent if for a LIBOR Advance, prepay the outstanding amount of any
Advance under any Credit in whole or in part, without premium or penalty, except
as required by Section 2.14 hereof. Prepayments of any LIBOR Advance or any
portion thereof shall be in the minimum amount of $3,000,000 and in integral
multiples in excess thereof of $1,000,000, and shall include interest accrued to
the date of such prepayment. If Borrower partially prepays any outstanding LIBOR
Advance, the remaining outstanding portion thereof shall automatically convert
to a Base Rate Advance on the date of such prepayment.
(2) MANDATORY REDUCTION OF TOTAL COMMITMENTS AND REPAYMENT OF EXCESS.
The Total Commitments shall automatically be reduced on the dates and in the
amounts set forth in
27
Section 2.1(a). If as a result of such automatic reduction the aggregate of the
Advances (including Swing Line Advance) exceeds an amount equal to the then
applicable Maximum Principal Amount less the sum of all outstanding Swing Line
Advances plus the Letter of Credit Exposure, the amount of such excess shall be
immediately due and payable.
(3) UPON MATURITY. The Total Commitments shall be automatically
reduced to zero on the Maturity Date.
SECTION 1.14. FUNDING.
(1) LENDER FUNDING AND DISBURSEMENT. Each Lender shall, before 11:00
a.m. (San Francisco time) on the date of each borrowing (including the date of
any draw under a Letter of Credit) make available to Agent at Agent's Office, in
same day or immediately available funds, such Lender's Proportionate Share
thereof. After Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article IV, Agent will promptly disburse such
funds in same day or immediately available funds to Borrower. Unless otherwise
directed by Borrower in writing, Agent shall disburse the proceeds of each
borrowing to Borrower by deposit to any demand deposit account maintained by
Borrower with Agent.
(2) LENDER FAILURE TO FUND. Unless Agent shall have received notice
from a Lender on or prior to the date of any borrowing (including any draw under
a Letter of Credit) that such Lender will not make available to Agent such
Lender's Proportionate Share thereof, Agent may assume that such Lender has made
such portion available to Agent on the date of such borrowing in accordance with
Section 2.9(a), and Agent may, in reliance upon such assumption, make available
to Borrower (or otherwise disburse) on such date a corresponding amount. If any
Lender does not make the amount of its Proportionate Share of any borrowing
available to Agent on the date of such borrowing, such Lender shall pay to
Agent, on demand, interest which shall accrue on such amount until made
available to Agent at rates equal to (i) the daily Federal Funds Rate during the
period from the date of such borrowing through the third Business Day
thereafter, and (ii) thereafter, the Prime Rate in effect from time to time. A
notice from Agent submitted to any Lender with respect to any amounts owing
under this Section 2.9(b) shall be presumptive evidence of such amounts. If any
Lender's Proportionate Share of any borrowing is not in fact made available to
Agent by such Lender within three (3) Business Days after the date of such
borrowing, Borrower shall pay to Agent, on demand, an amount equal to such
Proportionate Share together with interest thereon, for each day from the date
such amount was made available to Borrower until the date such amount is repaid
to Agent, at the rate of interest then applicable thereto.
(3) LENDERS' OBLIGATIONS SEVERAL. The obligation of each Lender
hereunder is several. The failure of any Lender to make available its
Proportionate Share of any borrowing shall not relieve any other Lender of its
obligation hereunder to do so on the date requested, but no Lender shall be
responsible for the failure of any other Lender to make available the
Proportionate Share to be funded by such other Lender.
SECTION 1.15. PRO RATA TREATMENT.
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(1) BORROWINGS. Except as otherwise provided herein, (i) extension of
credit under the Revolving Reducing Line of Credit, including in respect of any
draw under a Letter of Credit, shall be made or shared among the Lenders pro
rata according to their respective Proportionate Shares, and (ii) each payment
of principal of and interest or fees on a Credit (other than in respect of any
Swing Line Advance and administrative fees in respect of Letters of Credit,
which shall be made to Xxxxx Fargo) shall be made or shared among the Lenders
pro rata according to the respective unpaid principal amounts of the Advances
held by such Lenders.
(2) SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff or
otherwise) on account of a Credit in excess of its ratable share of payments on
account of such Credit obtained by all Lenders entitled to such payments, such
Lender shall forthwith purchase from the other Lenders sufficient participations
in such Credit as shall be necessary to increase the purchasing Lender's
interest in the Credit to such amount as may be necessary to render the excess
payment received an amount equal to such Lender's ratable share of payments, as
so increased; PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and each other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such other Lender's ratable share (according to the proportion of (i) the amount
of such other Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.10(b) may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.
SECTION 1.16. GUARANTIES.
(1) GUARANTIES; SUBORDINATIONS. The Obligations shall be jointly and
severally guaranteed by Guarantors, as evidenced by and subject to the terms of
the Subsidiary Guaranties. Pursuant to the terms of the Subsidiary Guaranties,
all obligations and Indebtedness of Borrower to each Guarantor and of any
Guarantor to any other Guarantor is subordinated in right of repayment to all
obligations and Indebtedness of Borrower to Agent and the Lenders.
(2) CERTAIN ACKNOWLEDGMENTS BY BORROWER. Borrower recognizes and
acknowledges the Credits made available hereunder are being established and will
be maintained in the manner provided herein and in the other Loan Documents at
the express request of, and to accommodate the administrative and operational
requirements of, Borrower and Guarantors. Specifically, the Credits might have
been established to provide for direct borrowings by Borrower and by each
Guarantor, subject to individual borrowing limits consistent with the Lenders'
prudent lending practices, based on each such Person's borrowing capacity, with
additional credit needs of such Person in excess of such borrowing limit being
accommodated by loans made to such Person by Borrower or other Guarantors having
excess borrowing capacity. For administrative and operational reasons imposed by
Borrower as aforesaid, however, the Credits are being established and will be
maintained as described above, but with the intention, as confirmed in Section
5.8 (but
29
without limiting in any manner the obligations of Borrower to repay any and all
Advances in accordance with the terms hereof and of the Notes), that Borrower
and Guarantors ultimately share, among themselves, repayment obligations under
the Credits to the same extent as if such borrowings had been made under the
alternative, individualized arrangement described above. In addition, it is
further recognized and acknowledged that Borrower, and each Guarantor, will
directly and indirectly benefit from the expansion of Borrower's and Guarantors'
collective business activities, as facilitated by the Credits.
SECTION 1.17. CHANGE OF CIRCUMSTANCES.
(1) INABILITY TO DETERMINE RATE. If Agent at any time shall
reasonably determine that adequate and reasonable means do not exist for
ascertaining LIBOR, or the Majority Lenders shall reasonably determine at any
time that LIBOR does not accurately reflect the cost to the Lenders of making or
maintaining LIBOR interest rates hereunder, then Agent shall give telephonic
notice (promptly confirmed in writing) to Borrower and each Lender of such
determination. If such notice is given and until such notice has been withdrawn
in writing by Agent, then no LIBOR interest option may be selected by Borrower
and any LIBOR Advance, as of the end of the Fixed Rate Term applicable thereto,
shall be converted to a Base Rate Advance pursuant to the terms and conditions
of this Agreement. Agent shall review the circumstances affecting the London
interbank market from time to time and withdraw such notice at such time as it
shall reasonably determine that the circumstances giving rise to said notice no
longer exist.
(2) ILLEGALITY: TERMINATION OF COMMITMENT. Notwithstanding any other
provisions herein, if any Change of Law shall make it unlawful for any Lender
(i) to make a LIBOR interest rate available, or (ii) to maintain LIBOR interest
rates hereunder, then, in the former event, any obligation of the Lenders
hereunder to make available such unlawful LIBOR interest rate shall forthwith be
canceled, and in the latter event, any such unlawful LIBOR Advance then
outstanding shall at the option of Agent be converted to a Base Rate Advance
pursuant to the terms of this Agreement; PROVIDED, HOWEVER, if any such Change
in Law shall permit a LIBOR interest rate until the expiration of the Fixed Rate
Term relating thereto, then such permitted LIBOR interest rate shall continue as
such until the end of such Fixed Rate Term. In the event any outstanding
principal amount to which such LIBOR interest rate is converted to a lower rate
in accordance with the foregoing terms and provisions, Borrower shall pay to
each Lender, within thirty (30) days following demand accompanied by a
certificate of such Lender describing the basis therefor and the calculation
thereof, such amount or amounts as may be necessary to compensate such Lender
for any loss in connection therewith.
(3) CHARGES: ILLEGALITY. Upon the occurrence of any event described
in Section 2.12(b), Borrower shall pay to each Lender, within thirty (30) days
following demand accompanied by a certificate of such Lender describing the
basis therefor and the calculation thereof, such amount or amounts as may be
necessary to compensate such Lender for any fines, fees, charges, penalties or
other amounts payable by such Lender as a result thereof and which are
attributable to LIBOR interest rates made available to Borrower hereunder. In
determining which amounts payable by any Lender or losses incurred by any Lender
are attributable to LIBOR interest rates made available to
30
Borrower hereunder, any reasonable allocation made by any Lender among its
operations, absent manifest error, shall be conclusive and binding upon
Borrower.
(4) CHARGES: CHANGE OF LAW. If, after the date of this Agreement, any
Change of Law:
(1) shall subject any Lender to any tax, duty or other charge
with respect to any LIBOR interest rate, or shall change the basis of
taxation of payments by Borrower to any Lender of principal, interest, fees
or any other amount payable hereunder (except for changes in the rate of
taxation on the overall net income of any Lender imposed by the
jurisdiction of such Lender's incorporation or by any jurisdiction in which
its Applicable Lending Office is located); or
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or loans
by, or any other acquisition of funds by any Lender; or
(3) shall impose on any Lender any other condition;
and the effect of any of the foregoing is to increase materially the cost
to such Lender of making, renewing or maintaining any LIBOR interest rate
hereunder or to reduce any amount receivable by such Lender in connection
therewith, then Borrower shall, within thirty (30) days following demand
accompanied by a certificate of such Lender describing the basis therefor and
the calculation thereof, pay to such Lender such amount or amounts as may be
necessary to reimburse such Lender for such increased costs or to compensate
such Lender for such reduced amounts. Such certificate as to the amount of such
increased costs or reduced amounts, delivered by such Lender to Borrower, shall,
in the absence of manifest error, be conclusive and binding on Borrower for all
purposes.
(5) CAPITAL REQUIREMENTS. If any Lender shall have determined
that any Change of Law regarding capital adequacy which occurs after the Closing
Date has or shall have the effect of reducing the rate of return on the capital
of such Lender (or any entity controlling such Lender) as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
entity would have achieved but for such Change of Law (taking into consideration
such Lender's or such entity's policies with respect to capital adequacy), by an
amount deemed by such Lender to be material, then from time to time, within
thirty (30) days after demand by such Lender (with a copy to Agent) accompanied
by a certificate of such Lender describing the basis therefor and the
calculation thereof, Borrower shall pay to such Lender or such entity such
additional amounts as shall compensate such Lender or such entity for such
reduction. Any such request by a Lender under this Section 2.12(e) shall, in the
absence of manifest error, be conclusive and binding on Borrower for all
purposes.
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SECTION 1.18. TAXES ON PAYMENTS.
(1) PAYMENTS FREE OF TAXES. All payments made by Borrower under the
Loan Documents shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority (except net income taxes imposed on Agent or any Lender)
(with all such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter referred to herein as "Taxes"). If
any Taxes are required to be withheld from any amounts payable to Agent or any
Lender under the Loan Documents, the amounts so payable to Agent or such Lender
shall be increased to the extent necessary to yield to Agent or such Lender
(after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in the Loan Documents.
Whenever any Taxes are payable by Borrower, as promptly as possible thereafter,
Borrower shall send to Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by Borrower showing payment thereof. If Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to Agent the
required receipts or other required documentary evidence, Borrower shall
indemnify Agent and Lenders for any incremental taxes, interest or penalties
that may become payable by Agent or any Lender as a result of any such failure.
The agreements in this Section 2.13(a) shall survive the termination of this
Agreement.
(2) WITHHOLDING EXEMPTION CERTIFICATES. Each Lender agrees that it
will deliver to Borrower and Agent, upon the reasonable request of Borrower or
Agent, either (i) a statement that it is incorporated under the laws of the
United States of America or a state thereof, or (ii) if it is not so
incorporated, two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes.
SECTION 1.19. FUNDING LOSS INDEMNIFICATION. If Borrower shall (a) repay or
prepay any portion of a Credit which bears interest determined in relation to
LIBOR on any day other than the last day of the Fixed Rate Term therefor
(whether an optional prepayment, a mandatory prepayment, a payment upon
acceleration or otherwise), (b) fail to borrow any such portion of a Credit for
which a Notice of Borrowing has been delivered to Agent (whether as a result of
the failure to satisfy any applicable conditions or otherwise), or (c) fail to
convert or continue at the LIBOR interest option any portion of a Credit in
accordance with a Notice of Conversion or Continuation delivered to Agent
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), Borrower shall, within thirty (30) days after demand by such Lender
(with a copy to Agent) accompanied by a certificate of such Lender describing
the basis therefor and the calculation thereof, reimburse such Lender and hold
such Lender harmless for all reasonable costs and losses incurred by such Lender
as a result of such repayment, prepayment or failure, to the extent that such
costs and losses (x) arise from funding and other contracts entered into, or
similar arrangements made, by such Lender to fund any LIBOR portion of any
Credit or (y) are incidental to such contracts or other arrangements. Each
Lender demanding payment under this Section 2.14 shall deliver to Agent for
delivery to Borrower a certificate setting forth the amount of costs and
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losses for which demand is made. Such a certificate so delivered to Borrower
shall, in the absence of manifest error, be conclusive and binding on Borrower
as to the amount of such loss for all purposes. Calculations of all amounts
payable to a Lender under this Section 2.14 shall be made as though that Lender
had actually funded each of its relevant LIBOR Advances through the purchase of
a deposit of the type described in clause (i) of the definition of LIBOR in an
amount equal to the amount of such LIBOR Advance, and having a maturity
comparable to the relevant Fixed Rate Term of such LIBOR Advance, whether or not
the Lender has funded such LIBOR Advance in such manner. The agreements in this
Section 2.14 shall survive the termination of this Agreement.
SECTION 1.20. LIMITATION ON REIMBURSEMENT AND INDEMNITY OBLIGATIONS.
Notwithstanding any other provision of this Agreement or the other Loan
Documents, no Lender shall be entitled to claim, under any of the foregoing
Sections 2.12(b), 2.12(c), 2.12(d), 2.12(e), 2.13 and 2.14, any amount arising
solely thereunder in respect of the period preceding the date of the relevant
demand by more than 360 days.
SECTION 1.21. AUTHORIZED REPRESENTATIVES. Agent shall be entitled to rely
conclusively on the authority of each officer or employee designated as an
Authorized Representative in the most current Notice of Authorized
Representatives delivered by Borrower to Agent to request borrowings and select
interest rate options hereunder, and to give to Agent such other notices as are
specified herein as being made through one of Borrower's Authorized
Representatives, until such time as Borrower has delivered to Agent, and Agent
has actual receipt of, a new written Notice of Authorized Representatives. Agent
shall have no duty or obligation to Borrower to verify the authenticity of any
signature appearing on any Notice of Borrowing, or any other written notice from
an Authorized Representative or to verify the authenticity of any person
purporting to be an Authorized Representative giving any telephonic notice
permitted hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and the Lenders as follows, which
representations and warranties shall survive the execution of this Agreement:
Except as set forth in the Borrower Disclosure Letter (which indicates which
sections of this Agreement are qualified by the disclosures set forth therein):
SECTION 1.22. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of California, and is
qualified or licensed to do business and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which the failure to so
qualify or to be so licensed could have a Material Adverse Effect. Each
Subsidiary is a corporation, limited liability company or limited partnership,
duly organized and existing and in good standing under the laws of the State
indicated for such Subsidiary in Section 3.1 of the Borrower Disclosure Letter
(or, with respect to Subsidiaries acquired after the date hereof, as indicated
on the relevant notice required to be delivered pursuant hereto), and is
qualified or licensed to do business and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which the failure to so
qualify or to be so licensed could have a Material Adverse Effect. A true and
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correct list of (i) all names (including any former names) used within the five
(5) years preceding the date of this Agreement by Borrower or any Subsidiary
listed in Section 3.1 of the Borrower Disclosure Letter, and (ii) to the best
knowledge of Borrower, all names (including any former names) used within the
five (5) years preceding the date of this Agreement by any Person acquired by
Borrower or any Subsidiary listed in Section 3.1 of the Borrower Disclosure
Letter, or any Person all or any substantial portion of the assets of which has
been acquired by Borrower or any such Subsidiary, during such period, is set
forth in Section 3.1 of the Borrower Disclosure Letter. Except as indicated in
the Borrower Disclosure Letter, neither Borrower nor any Subsidiary currently
operates under any name other than its true corporate (or other entity) name
(indicated, in the case of Borrower, on the signature pages hereto, and in the
case of any Subsidiary listed in Section 3.1 of the Borrower Disclosure Letter,
in that Section 3.1).
SECTION 1.23. AUTHORIZATION AND VALIDITY. The Loan Documents to which
Borrower or any Subsidiary is or is to become a party have been duly authorized
by Borrower or such Subsidiary, and, upon their execution and delivery in
accordance with the provisions hereof, will constitute legal, valid and binding
agreements and obligations of Borrower or such Subsidiary, as the case may be,
enforceable in accordance with their respective terms.
SECTION 1.24. NO VIOLATION. The execution, delivery and performance by
Borrower or any Subsidiary of each of the Loan Documents to which such Person is
or is to become a party do not violate any provision of any Governmental Rule,
or contravene any provision of the Articles or Certificate of Incorporation,
By-Laws or other organizational documents of Borrower or any Subsidiary, or
result in a breach of or constitute a default under any one or more contracts,
obligations, indentures or other instruments to which Borrower or any Subsidiary
is a party or by which Borrower or any Subsidiary may be bound and pursuant to
which Borrower or any Subsidiary is obligated to pay in excess of (a) in any one
instance, $200,000, or (b) in the aggregate, $2,000,000.
SECTION 1.25. LITIGATION. There are no pending or threatened actions,
claims, investigations, suits or proceedings before any Governmental Authority
which could have a Material Adverse Effect.
SECTION 1.26. CORRECTNESS OF FINANCIAL STATEMENTS. The consolidated
financial statements of Borrower dated as of and for the fiscal year ended July
31, 2000 heretofore delivered by Borrower to Agent (a) are complete and correct
in all material respects and present fairly the consolidated financial condition
of Borrower as of such date; (b) disclose all material consolidated liabilities
of Borrower that are required to be reflected or reserved against therein under
GAAP, whether liquidated or unliquidated, fixed or contingent; and have been
prepared in accordance with GAAP. Since the date of (x) such financial
statements, or (y) if applicable, the most recent financial statements delivered
to the Lenders pursuant to Section 5.3: (i) there has been no occurrence that
has had a Material Adverse Effect, and (ii) neither Borrower nor any Subsidiary
has created, or suffered to exist, any Lien with respect to all or any portion
of its assets or properties except as permitted by this Agreement.
SECTION 1.27. OTHER OBLIGATIONS; LIENS. Neither Borrower nor any Subsidiary
is in default on any Indebtedness or any other material lease, commitment,
contract, instrument or
34
obligation, which default could have a Material Adverse Effect. Neither Borrower
nor any Subsidiary is obligated in respect of any Indebtedness, whether secured
or unsecured, matured or unmatured, liquidated or unliquidated, joint or
several, other than (a) the Obligations and the obligations of Guarantors under
the Loan Documents, and (b) Indebtedness not prohibited by any provision of
Article VI. Borrower, and each Subsidiary owns good title to each of the assets
reflected on the most recent financial statements previously delivered to the
Lenders (other than any such assets disposed of in a transaction not prohibited
by any of the provisions of Article VI or any other Loan Document after the date
of such financial statements), subject to no Liens other than Permitted Liens.
SECTION 1.28. PERMITS, FRANCHISES. Borrower, and each Subsidiary,
possesses, (a) all permits, and will hereafter possess, memberships, franchises,
contracts and licenses required, and (b) and all trademark rights, trade names,
trade name rights, patents, patent rights and fictitious name rights necessary,
to enable it to conduct the business in which it is now engaged without
violation of any Governmental Rule or conflict with the rights of others, except
where the failure so to possess such items would not have a Material Adverse
Effect.
SECTION 1.29. ERISA. Borrower, and each Subsidiary, is in compliance in all
material respects with all applicable provisions of ERISA; neither Borrower nor
any Subsidiary has violated any provision of any Plan maintained or contributed
to by Borrower or such Subsidiary; no Reportable Event as defined in ERISA has
occurred and is continuing with respect to any Plan initiated or contributed to
by Borrower or any Subsidiary; Borrower, and each Subsidiary, has met its
minimum funding requirements under ERISA with respect to each Plan; and each
Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under GAAP.
SECTION 1.30. ENVIRONMENTAL MATTERS.
(1) Borrower, and each Subsidiary, is in compliance in all respects
with all applicable environmental, hazardous waste, health and safety statutes
and regulations (collectively, "Environmental Laws") governing its operations or
properties (whether owned, leased or operated), including the Comprehensive
Environmental Response, Compensation and Liability Act of 2980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, the Federal Toxic Substances Control Act and the
California Health and Safety Code, except to the extent that non-compliance
would not have a Material Adverse Effect.
(2) Each of Borrower and its Subsidiaries has obtained all
Governmental Approvals required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such Governmental Approvals would not have a Material
Adverse Effect. Each of such Governmental Approvals is in all material respects
in full force and effect and each of Borrower and its Subsidiaries is in
compliance with the terms and conditions of such Governmental Approvals, and is
also in compliance with all other provisions of any applicable Environmental Law
or in any Governmental Rule issued, entered, promulgated or approved under any
Environmental Law, except to the extent failure to comply with such provisions
would not have a Material Adverse Effect.
35
(3) Borrower conducts in the ordinary course of business a review of
the effect of existing Environmental Laws and existing Environmental Claims on
or in respect of its business, operations and properties, and as a result
thereof Borrower has reasonably concluded that such Environmental Laws and
Environmental Claims would not, individually or in the aggregate, have a
Material Adverse Effect.
(4) Other than as disclosed to Agent in writing, none of the
operations of Borrower or any Subsidiary, or any real property owned, leased or
operated by Borrower or any Subsidiary, is the subject of any investigation by
any Governmental Authority evaluating whether any remedial action involving a
material expenditure is needed to respond to a release of any toxic or hazardous
waste or substance into the environment.
(5) Neither Borrower nor any Subsidiary has, in connection with any
release of any toxic or hazardous waste or substance into the environment, any
contingent liability which would have a Material Adverse Effect.
SECTION 1.31. INCOME TAX RETURNS. As of the date hereof, neither Borrower
nor any Subsidiary has any knowledge of any pending assessments in excess in the
aggregate of $100,000 or adjustments of its income tax payable with respect to
any year.
SECTION 1.32. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower or any Subsidiary is a party or by which
Borrower or any Subsidiary may be bound that requires the subordination in right
of payment of any of Borrower's or any such Subsidiary's obligations subject to
this Agreement to any other obligation of Borrower or such Subsidiary.
SECTION 1.33. SUBSIDIARIES AND OTHER INVESTMENTS. Borrower owns no stock or
equity interest in any Person (directly or indirectly), and holds no debt
obligation of any Person, other than (a) accounts receivable arising in the
ordinary course of business; (b) stock and equity interests in Persons listed in
Section 3.1 of the Borrower Disclosure Letter or (if acquired after the date
hereof) otherwise advised to Agent in writing to the extent required under the
provisions hereof, in each case, identifying whether such Subsidiary is wholly
owned or, if not, the percentage of the outstanding equity of such Subsidiary
owned by Borrower (directly or indirectly); (c) Permitted Investments; or (d)
other Investments not prohibited by Section 6.5. As of the date hereof, Section
3.1 of the Borrower Disclosure Letter correctly identifies the address of the
chief executive office of Borrower and of each Subsidiary.
SECTION 1.34. GOVERNMENTAL REGULATION. Neither Borrower nor any Subsidiary
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, the Investment Company Act
of 1940 or any other federal or state statute or regulation such that Borrower's
ability to incur indebtedness is limited or its ability to consummate the
transactions contemplated by the Loan Documents is materially impaired.
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SECTION 1.35. TRUTH, ACCURACY OF INFORMATION. All financial and other
information furnished to Agent or any Lender in connection with this Agreement,
taken together (and including the SEC Documents), is true and correct in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the information
furnished, in light of the circumstances under which furnished, not misleading
(it being recognized by Agent and the Lenders that projections and forecasts
provided by Borrower are not to be viewed as facts and that actual results
during the period or periods covered by any such projections and forecasts may
differ from the projected or forecasted results).
SECTION 1.36. USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Credits hereunder are intended to be and shall be used solely for the purposes
set forth in and permitted by Section 2.1(a), subject to the limitations set
forth elsewhere in this Agreement. Borrower will at all time ensure that no
portion of the proceeds of any Credit shall be (i) used, directly or indirectly,
for any purpose that entails a violation of, or is inconsistent with, or would
impose any reporting requirement under, any of the Regulations of the Federal
Reserve Board, including Regulations T, U or X, or (ii) secured, directly or
indirectly (within the meanings set forth in Regulations T, U and X, as
applicable) by any Margin Stock. Borrower will not use any portion of any
proceeds of any Credit, directly or indirectly, for any Acquisition other than a
Permitted Acquisition.
SECTION 1.37. GUARANTORS. Each of the Subsidiaries required to execute and
deliver a Guaranty pursuant to Section 5.11 has executed its Subsidiary Guaranty
and delivered it to the Agent for the benefit of the Agent and the Lenders.
ARTICLE IV
CONDITIONS
SECTION 1.38. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The obligation of
the Lenders to extend the initial credit contemplated by this Agreement (whether
the making of an Advance or the issuance of a Letter of Credit) is subject to
the fulfillment to Agent's satisfaction of all of the following conditions:
(1) APPROVAL OF AGENT'S COUNSEL. All legal matters incidental to the
extension of credit hereunder shall be satisfactory to counsel for Agent.
(2) DOCUMENTATION. Agent shall have received, in form and substance
satisfactory to Agent, each of the following duly executed:
(1) This Agreement, the Revolver Notes and the Swing Line Note;
(2) a corporate borrowing resolution from Borrower, certified by
its Secretary or Assistant Secretary as of the Closing Date;
37
(3) authorizing resolutions of the respective boards of
directors, partners, members or managers (as applicable) from each
Guarantor authorizing the execution and delivery of its Subsidiary
Guaranty, certified as of the Closing Date by its Secretary or Assistant
Secretary;
(4) a copy of the charter, as amended and in effect, of Borrower
and each Guarantor, certified as of a recent date by the Secretary of State
of its jurisdiction of incorporation, and the by-laws or other applicable
charter documents of Borrower and each Guarantor as in effect on the
Closing Date, certified by the respective Secretaries or Assistant
Secretaries of Borrower and the Guarantors as of the Closing Date;
(5) a good standing certificate and a tax good standing
certificate from the Secretary of State (or similar, applicable
Governmental Authority) as of a recent date, and, if requested by the
Agent, a bring-down certificate by facsimile dated on or about the Closing
Date, for Borrower and each Guarantor, of its state of incorporation, and
such other jurisdictions as Agent may reasonably request;
(6) Certificate of Incumbency from Borrower and from each
Guarantor;
(7) Subsidiary Guaranty executed by each Guarantor;
(8) Notice of Authorized Representatives;
(9) a favorable written opinion (addressed to Agent and the
Lenders and dated the Closing Date) of legal counsel to Borrower and each
Guarantor, in form and substance satisfactory to the Agent and its counsel,
covering such matters relating to Borrower, the Guarantors, this Agreement,
the Notes, the Subsidiary Guaranties, the other Loan Documents and the
borrowings hereunder, as the Agent may reasonably request;
(10) a certificate of a Responsible Officer, dated as of the
Closing Date, that the conditions set forth in Section 4.1(c), 4.2 (b) and
4.2(c) have been satisfied; and
(11) the compliance certificate of a Responsible Officer, dated
as of the Closing Date, as required pursuant to the definition of
Applicable Margin in Section 1.1.
(3) FINANCIAL CONDITION. Since the date of the most recent financial
statements delivered to the Lenders, as of the date hereof, there shall have
occurred no Material Adverse Effect.
(4) FEES AND EXPENSES. Borrower shall have paid all fees and
reasonable invoiced costs and expenses then due pursuant to the terms of this
Agreement.
(5) PAYMENT OF AMOUNTS DUE UNDER EXISTING CREDIT AGREEMENT. All
amounts, if any, remaining due and unpaid under the Existing Credit Agreement
(other than in respect of the Existing Letters of Credit) shall, prior to or
concurrently with the initial Advance hereunder, have been paid in full.
38
(6) DUE DILIGENCE. Agent and each Lender shall have completed due
diligence to its satisfaction, including but not limited to the review of
Borrower's five year financial projections.
(7) BORROWER DISCLOSURE LETTER. The Agent and the Lenders shall have
received the Borrower Disclosure Letter, which shall be satisfactory to each of
them in form and substance.
Without prejudice to any of the rights or remedies of Agent and the Lenders
in respect of any Default or Event of Default (and subject to the terms of any
waiver executed in connection with the initial Advance), the initial extension
of credit by the Lenders pursuant to this Agreement shall be deemed to be an
acknowledgment by the Lenders and Agent that the conditions set forth in this
Section 4.1 have been fulfilled to Agent's satisfaction.
SECTION 1.39. CONDITIONS TO EACH EXTENSION OF CREDIT. The obligation of the
Lenders to make each Advance (other than an Advance in respect of a draw under a
Letter of Credit) or issuance of a Letter of Credit requested by Borrower
hereunder shall be subject to the fulfillment, to Agent's reasonable
satisfaction, of all of the following conditions:
(1) NOTICE OF BORROWING. Agent shall have received a completed Notice
of Borrowing as and when required under Section 2.4.
(2) ABSENCE OF DEFAULTS. On each such date, no Default or Event of
Default shall have occurred and be continuing immediately prior to giving effect
to such Advance or shall exist immediately after giving effect to such Advance.
(3) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein shall be true and correct in all material respects
on and as of the date of the signing of this Agreement and on the date of each
such extension of credit by the Lenders pursuant hereto (except to the extent
such representations or warranties are conditioned by reference to a specific
date, in which case they shall be true and correct in all material respects as
of such date), with the same effect as though such representations and
warranties had been made on and as of each such date.
Borrower's delivery of any Notice of Borrowing, any Notice of
Conversion/Continuation, or any request for a Swing Line Advance or for issuance
of a Letter of Credit, shall be deemed Borrower's representation and warranty
that, as of the date of notice or request and as of the date of the requested
Advance (including any issuance of a Letter of Credit), each of the foregoing
conditions shall be satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
39
Borrower covenants that so long as the Lenders remain committed to
extend credit to Borrower pursuant to the terms of this Agreement or any payment
Obligations remain outstanding, and until payment in full of all such
outstanding payment Obligations (including, without limitation, the
cancellation, termination or cash collateralization as provided herein of all
outstanding Letters of Credit), Borrower shall, and shall cause each Subsidiary
to, unless Majority Lenders shall otherwise consent in writing:
SECTION 1.40. PUNCTUAL PAYMENTS. Punctually pay all interest, principal,
fees and other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Agent,
the amount by which the outstanding principal balance of the Revolving Reducing
Line of Credit (including the Swing Line) at any time exceeds Loan Availability.
SECTION 1.41. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with GAAP, and permit any representative of any Lender, at any
reasonable time and upon reasonable notice, to inspect, audit and examine such
books and records, to make copies of the same, and to inspect the properties of
Borrower or any Subsidiary.
SECTION 1.42. FINANCIAL STATEMENTS. Provide to Agent and each Lender all of
the following, in form and detail reasonably satisfactory to Agent:
(1) not later than ninety (90) days after and as of the end of each
fiscal year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP (to include balance sheet, statement of income, statement
of cash flows and statement of shareholders' equity), together with an
unqualified opinion of an independent certified public accountant of national or
regional reputation;
(2) not later than forty-five (45) days after and as of the end of
each fiscal quarter, consolidated financial statements of Borrower prepared in
accordance with GAAP (to include balance sheet, statement of income and
statement of cash flows), certified as complete and correct in all material
respects by a senior financial officer of Borrower, together with a comparison
of Borrower's actual financial condition for said fiscal quarter to that of the
same fiscal quarter in the immediately preceding fiscal year;
(3) within 10 days after delivery of the financial statements as and
when required to be delivered pursuant to Section 5.3(a) and 5.3(b) a compliance
certificate substantially in the form of EXHIBIT H hereto, certified by a senior
financial officer of Borrower, which includes (i) calculations confirming
Borrower's compliance with all financial covenants contained in Section 5.6 as
of the date of the most recent balance sheet included in such financial
statements, and (ii) a certification to the effect that, as of the end of such
fiscal quarter, no Default or Event of Default had occurred and was continuing
(or, if any Default or Event of Default was then continuing, a description of
such Default or Event of Default and of the action that Borrower proposes to
take, or cause to be taken, in connection therewith);
40
(4) not later than seventy-five (75) days after the end of each
fiscal year, projections of consolidated financial statements for Borrower's
subsequent fiscal year; and
(5) from time to time such other information as Agent or any Lender
may reasonably request (provided that Borrower shall not be required to deliver
information the delivery of which would violate any confidentiality requirements
imposed by law or contract (provided that such contractual requirements were not
entered into principally to prevent disclosure to Agent or the Lenders), except
where such delivery would be permitted subject to an agreement by Agent and the
Lenders to treat such information confidentially and Agent and the Lenders agree
to comply with such requirements of confidentiality).
Delivery by Borrower of its Annual Report on Form 10-K with respect to any
fiscal year shall be deemed to satisfy the requirements of Section 5.3(a) for
such year (provided that the included opinion of independent certified public
accountants is unqualified and that such Annual Report otherwise complies with
the requirements of applicable regulations); and delivery by Borrower of its
Quarterly Report on Form 10-Q for any fiscal quarter shall be deemed (i) unless
otherwise noted at the time by Borrower, to constitute a certification by
Borrower that the financial statements included therein with respect to the most
recently completed fiscal quarter are complete and correct in all material
respects and (ii) to satisfy the requirements of Section 5.3(b) for such quarter
(provided that the certification described in the foregoing clause (i) is deemed
made as provided therein and that such Quarterly Report otherwise complies with
the requirements of applicable regulations).
SECTION 1.43. COMPLIANCE. Maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business in substantially the manner in which it is conducted as of the date
hereof; conduct its business in an orderly and regular manner; and comply with
the provisions of all documents pursuant to which Borrower or any Subsidiary is
organized or which govern Borrower's or any Subsidiary's continued existence and
with the requirements of all Governmental Rules, or any Governmental Authority,
applicable to Borrower or any Subsidiary, its business, or any real property
owned, leased or operated by it; except, in the case of any of the foregoing,
where the failure to do so would not have a Material Adverse Effect.
SECTION 1.44. FACILITIES. In a manner consistent with prudent business
practices and subject to Section 6.2(c), keep all properties of Borrower and
each Subsidiary useful or necessary to its business in good repair and
condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
SECTION 1.45. FINANCIAL COVENANTS. Maintain the financial condition (or
results, as the case may be) of Borrower on a consolidated basis as follows
(using GAAP consistently with prior practices, except to the extent otherwise
provided herein):
(1) As of the last day of each fiscal quarter for the period of the
fiscal quarter ending on such date and the immediately preceding three fiscal
quarters, a ratio of Funded Debt to EBITDA not greater than:
41
for the period from the Closing Date 3.00 to 1.00
through 02/28/2003
03/01/2003 through 02/29/2004 2.50 to 1.00
03/01/2004 through 02/28/2005 2.25 to 1.00
03/01/2005 though Maturity Date 2.00 to 1.00
(2) Profitable operations (after tax, but without deduction of
non-recurring non-cash expenses other than any one time charges permitted to be
taken in such period as a consequence of a change in GAAP) for every period of
two consecutive fiscal quarters, determined as of the last day of each fiscal
quarter for the period consisting of the fiscal quarter ending on such date and
the immediately preceding fiscal quarter.
(3) Leverage Ratio not greater than 2.50 to 1.00 as of the end of
each fiscal quarter.
(4) As of the last day of each fiscal quarter for the period of the
fiscal quarter ending on such date and the immediately preceding three fiscal
quarters, an Interest Coverage Ratio of not less than 3.00 to 1.00.
SECTION 1.46. NOTICE TO AGENT. Promptly (but in no event more than ten (10)
days after a Responsible Officer has knowledge of the occurrence of each such
event or matter) give written notice to Agent in reasonable detail of:
(1) the occurrence of any Default other than one arising from the
failure to pay money due to Agent or any Lender hereunder (PROVIDED that no such
notice shall be required to be given if, prior to the expiration of such 10-day
period (i) such Default is cured or (ii) Agent or any Lender has notified
Borrower in writing of the existence of such Default);
(2) any change in the name of Borrower or any Guarantor or any
material change in the organizational structure of Borrower or any Guarantor
that requires or involves an amendment to its charter documents;
(3) any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting the
property of Borrower or any Subsidiary, if such loss (i) is in excess of
$l,000,000 in any one case or (ii) together with all other such losses during
any one fiscal year, would cause the aggregate amount of such losses to exceed
$5,000,000;
(4) (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or to the knowledge of
Borrower or any Subsidiary, threatened against Borrower or any Subsidiary or any
of their respective Properties pursuant to any
42
applicable Environmental Laws, and all other Environmental Claims if any of the
foregoing, individually or in the aggregate, would have a Material Adverse
Effect, and (iii) to the knowledge of Borrower or any Subsidiary any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of Borrower or any Subsidiary that could reasonably be
anticipated to cause such property or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use of
such property under any Environmental Laws;
(5) all legal, arbitration or investigatory proceedings, and of all
proceedings by or before any Governmental Person, and any material development
in respect of any such proceedings, affecting Borrower or any of its
Subsidiaries, except proceedings which, if adversely determined, would not
either have a Material Adverse Effect or result in liability to Borrower or any
Subsidiary in excess of $1,000,000; without limiting the generality of the
foregoing, Borrower will give to the Agent and each Lender notice of the
assertion of any Environmental Claim by any Person against, or with respect to
the activities of, Borrower or any of its Subsidiaries and notice of any alleged
violation of or noncompliance with any Environmental Laws of any Governmental
Approvals under Environmental Laws other than any Environmental Claim or alleged
violation which, if adversely determined, would not have a Material Adverse
Effect;
(6) the incurrence of any contractual obligation of Borrower or any
Subsidiary with respect to any Acquisition if with respect to such Acquisition
information would be required to be delivered to Agent and the Lenders pursuant
to Section 6.2(b)(iii); and
(7) any material change in accounting policies or financial reporting
practices.
SECTION 1.47. INDEMNITY OF GUARANTORS. Indemnify and hold harmless each
Guarantor from and against any liability (in the form of indebtedness repaid to
the Lenders in respect of the Obligations, including (if applicable) by way of
foreclosure under any security agreement at any time hereafter executed by such
Guarantor for the benefit of the Lenders) in excess of the benefit realized by
such Guarantor from the proceeds of Advances under the Revolving Reducing Line
of Credit, the issuance of Letters of Credit or under the Credits described in
the Existing Credit Agreement. As between and among Borrower and Guarantors,
Borrower and the other Guarantors shall be responsible to reimburse each
Guarantor in respect of amounts paid by such Guarantor under its guaranty of the
Obligations to the end that Borrower, and each Guarantor, ultimately bears the
burden of payment of its respective share of the Obligations.
SECTION 1.48. INSURANCE COVERAGE. Maintain, or cause to be maintained, for
itself and its Subsidiaries, insurance against loss, damage and other risks of
the kinds customarily insured against by Persons similarly situated, with
reputable insurers, in such amounts, and with such deductibles and by such
methods as shall be adequate, and in any event in amounts not less than the
amounts generally maintained by other Persons engaged in businesses comparable
to those engaged in by Borrower and its Subsidiaries. From time to time, upon
the written request of Agent, Borrower shall deliver to Agent insurance
certificates evidencing the coverages maintained by Borrower.
SECTION 1.49. TAXES. Pay and discharge, and cause its Subsidiaries to pay
and discharge, all taxes, assessments and governmental charges or levies imposed
on it or on its income
43
or profits or on any of its properties prior to the date on which penalties
attach, except for any such tax, assessment, charge or levy the payment of which
is being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained. SECTION 1.1.
SECTION 1.50. SUBSIDIARY GUARANTIES. Borrower shall cause each Subsidiary
that at any time has either assets with a fair market value in excess of
$100,000, or revenues in any fiscal year in excess of $100,000 to execute and
delivery a Subsidiary Guaranty and shall deliver or cause to be delivered such
proof of corporate action, incumbency of officers, opinions of counsel and other
documents as are consistent with those required to be delivered on the Closing
Date as to each Guarantor pursuant to Section 4.1.
ARTICLE VI
NEGATIVE COVENANTS
Borrower further covenants that so long as the Lenders remain committed to
extend credit to Borrower pursuant to the terms of this Agreement or any payment
Obligations remain outstanding, and until payment in full of all such
outstanding payment Obligations (including, without limitation, the
cancellation, termination or cash collateralization as provided herein of all
outstanding Letters of Credit), Borrower will not, and will not permit any
Subsidiary to, without the prior written consent of Majority Lenders:
SECTION 1.51. USE OF FUNDS. Use any of the proceeds of any of the Credits
except for the purposes stated in Article II with respect to the relevant
Credit.
SECTION 1.52. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Subject to the
last sentence of this Section 6.2:
(1) Merge with or into, or consolidate with, any other Person, except
(i) in a transaction complying with Section 6.2(b) in which Borrower or the
relevant Subsidiary is the surviving Person (or, in the case of a transaction
complying with Section 6.2(b) involving the merger or consolidation of a
Subsidiary, in which the surviving Person becomes a Guarantor and, no later than
five (5) Business Days following the effective date of such merger or
consolidation, executes and delivers to Agent a Subsidiary Guaranty, PROVIDED,
HOWEVER, that Borrower shall not become a subsidiary of any other Person; or
(ii) in a transaction (A) between Borrower and one or more Subsidiaries
(provided that Borrower is the surviving Person) or (B) among Subsidiaries
(PROVIDED that the Subsidiary that is the surviving Person is a Guarantor or, if
such Subsidiary will meet the definition of "Guarantor" as a result of such
merger, on or before the date of such Transfer has executed and delivered to
Agent a Subsidiary Guaranty); or
(2) acquire all or substantially all of the capital stock, or all or
any substantial portion of the assets (if such assets represent an ongoing
business), of any other Person (other than from Borrower or a Subsidiary), or
become contractually obligated to do so, unless:
44
(1) Borrower's Board of Directors has determined in its
reasonable business judgment that such Acquisition would lead to
efficiencies or synergies with the business of Borrower or any of its
Subsidiaries;
(2) a Responsible Officer of Borrower shall have certified to
Agent and the Lenders that, with respect to any Acquisition, both
immediately prior to and after the closing of such Acquisition, and in each
case, determined on a pro forma basis as of the last day of the most recent
fiscal quarter for the applicable fiscal periods required under Section 5.6
and as if such Acquisition had occurred immediately prior to the beginning
of such applicable period, (A) Borrower is in compliance with each of the
financial covenants contained in Section 5.6, and (B) no consent of the
Lenders for such Acquisition is required; consent of all of the Lenders for
any Acquisition is required, except for any Acquisition (x) for which, on a
pro forma basis, as of the last day of the most recent fiscal quarter for
the four fiscal quarter period ending on such date, the ratio of Funded
Debt to EBITDA is less than 1.00 to 1.00, or (y) if such ratio of Funded
Debt to EBITDA for such period is greater than or equal to 1.00 to 1.00 but
less than 2.00 to 1.00, the aggregate consideration (whether in cash, stock
or other property or by means of assumption of liabilities) for such
Acquisition is not greater than $75,000,000, or (z) if such ratio of Funded
Debt to EBITDA for such period is greater than or equal to 2.00 to 1.00
(but otherwise complies with the requirements of Section 5.6(a), the
aggregate consideration (whether in cash, stock or other property or by
means of assumption of liabilities) for such Acquisition is not greater
than $35,000,000; and
(3) if such Acquisition (A) would require the consent of the
Lenders or (B) involves the payment by Borrower or the acquiring Subsidiary
of aggregate consideration (whether in cash, stock or other property or by
means of assumption of liabilities) of (y) $20,000,000 or more if such
Person is engaged in substantially the same line of business as are
Borrower and the Subsidiaries as of the Closing Date or (z) $10,000,000 if
such Person is not engaged in substantially the same line of business as
are Borrower and the Subsidiaries as of the Closing Date (including any
Person that would become a Vehicle Auction Finance Subsidiary): Borrower
shall have delivered to Agent, no later than five (5) Business Days prior
to the closing thereof, notice and a description of such Acquisition and
(unless Majority Lenders have waived delivery thereof, based on such other
information as may have been provided to the Lenders with respect to such
Acquisition) calculations, based on pro forma financial statements of
Borrower as of the end of the most recently completed fiscal quarter of
Borrower giving pro forma effect to such Acquisition as of such date,
establishing that the requirements of the foregoing clause (ii) will be
met; or
(3) Sell, lease, transfer or otherwise dispose of (any such action, a
"Transfer") (A) all or substantially all of the assets of Borrower or any
Significant Guarantor, or (B) except in the ordinary course of business and for
fair and reasonable consideration, any substantial or material part of the
assets of Borrower and the Subsidiaries, considered as a whole; PROVIDED,
HOWEVER, that this Section 6.2(c) shall not prohibit (1) Transfers in connection
with the creation of operating leases or Capital Leases not prohibited by
Section 6.4 or 6.7; (2) Transfers by any Subsidiary (other than a Transfer of
all or substantially all of the assets of a Significant Guarantor) to Borrower
or to another Subsidiary that is a Guarantor or if such Subsidiary will meet the
definition of "Guarantor" as a result
45
of such Transfer, on or before the date of such Transfer has executed and
delivered to Agent a Subsidiary Guaranty; or (3) Transfers constituting a
dividend or other distribution permitted under Section 6.6 hereof. In the event
that any Transfer permitted under this Section 6.2(c) shall cause a Subsidiary
to no longer fall within the definition of a "Guarantor", Agent and the Lenders
shall take such steps as may be necessary to release such Guarantor from its
obligations to Agent and the Lenders hereunder and under any Subsidiary
Guaranty.
If any of the transactions otherwise permitted under this Section 6.2 would
involve, at a time when a Default or Event of Default has occurred and is
continuing, (i) the merger into Borrower or another Subsidiary of a Significant
Guarantor, (ii) the Transfer of all or substantially all of the assets of a
Significant Guarantor to Borrower or another Subsidiary, or (iii) the
liquidation or dissolution of a Significant Guarantor, Borrower shall first
obtain the prior written consent of the Majority Lenders, which consent shall be
withheld only if the Majority Lenders determine, in the reasonable exercise of
their discretion, that such transaction would materially adversely affect the
prospect of the Credits being repaid in full when due. Nothing in the foregoing
sentence shall limit the requirement for consent of all of the Lenders to any
transaction under Section 6.2 if such consent would otherwise be required.
SECTION 1.53. GUARANTEES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise(collectively, "Guarantee") for any liabilities or obligations of any
other Person (including Guarantees by Borrower of any obligations of
Subsidiaries) EXCEPT (a) such Guarantees as are required by this Agreement; (b)
Guarantees of obligations of Borrower or any Subsidiary, if the obligation so
guarantied is not prohibited by the other provisions of this Article VI, either
as a Guarantee obligation of Borrower or such Subsidiary or assuming that such
Guarantee obligation were the direct obligation of Borrower or such Subsidiary,
and (c) other Guarantees not exceeding $l,000,000 in the aggregate at any time.
SECTION 1.54. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any Indebtedness, whether secured or unsecured, matured or unmatured, liquidated
or unliquidated, joint or several, except:
(1) the Obligations and the obligations of Guarantors under the Loan
Documents;
(2) Indebtedness incurred to any Person from whom the capital stock
or all or any substantial portion of the assets (if such assets represent an
ongoing business) of a Person are acquired in a Permitted Acquisition, in an
amount not in excess of the purchase price thereof, PROVIDED that (i) such
Indebtedness is either unsecured or, if secured, is secured only by the capital
stock or assets so acquired or if such Person is acquired pursuant to a stock
acquisition, any assets of such Person (and the proceeds thereof), and (ii) both
immediately before and immediately following the incurrence of such obligation,
there shall not exist and be continuing any Default or Event of Default;
(3) Subordinated Debt;
(4) Indebtedness to Borrower or any Guarantor;
46
(5) Indebtedness of a Subsidiary created prior to the time such
Person was acquired directly or indirectly by Borrower, PROVIDED that such
Indebtedness was not created in anticipation of such acquisition;
(6) non-recourse Indebtedness incurred to finance the acquisition or
improvement of real property or the acquisition of equipment (other than
equipment which is not part of the trucking fleet of Borrower or any Subsidiary
that is or could become inventory of Borrower or any Subsidiary), in a principal
amount not in excess of the purchase price thereof, PROVIDED that such
Indebtedness is incurred within one year of the initial acquisition of such real
property or equipment (or, in the case of improvements, within one year of the
construction thereof) by Borrower or any Subsidiary and is secured by Liens
limited to (i) such real property (including improvements and fixtures) and the
rents, issues and profits thereof or (ii) such equipment (and nonmaterial
accessions), as the case may be, and the proceeds thereof;
(7) other liabilities of Borrower or any Subsidiary shown on
Borrower's financial statements as of July 31, 2000;
(8) Indebtedness listed in the Borrower Disclosure Letter;
(9) to the extent that the aggregate amount of all Indebtedness
incurred pursuant to this Section 6.4(i) does not exceed at any time ten percent
(10%) of Borrower's Net Worth:
(1) Indebtedness (not otherwise permitted under the preceding
paragraphs of this Section 6.4 or under paragraph (j) below as an
extension, refunding, refinancing, amendment or modification of
Indebtedness so otherwise permitted) incurred to finance the acquisition of
real property or equipment (other than equipment which is not part of the
trucking fleet of Borrower or any Subsidiary that is or could become
inventory of Borrower or any Subsidiary) or other fixed assets (other than
in connection with the acquisition of all or any substantial portion of the
assets, if such assets represent an ongoing business, of any Person),
including Capital Leases and other leases constituting Indebtedness;
PROVIDED that the principal amount of such Indebtedness (A) does not exceed
in any case the purchase price of such asset, (B) is either unsecured or is
secured by Liens that are limited to such asset and the proceeds thereof,
and (C) is incurred within one year of the initial acquisition of such
asset by Borrower or any Subsidiary; or
(2) Indebtedness, not otherwise permitted under the foregoing
provisions of this Section 6.4 or under paragraph (j) below as an
extension, refunding, refinancing, amendment or modification of
Indebtedness so otherwise permitted, the amount of which does not exceed
$10,000,000 in the aggregate at any one time;
(10) Indebtedness permitted pursuant to Section 6.12; and
(11) extensions, refundings, refinancings, amendments or modifications
of any of the foregoing, provided that (i) the principal amount thereof is not
increased; and (ii) if any Lien is
47
otherwise permitted to secure such original Indebtedness, no Lien securing such
Indebtedness is extended to property not theretofore securing such Indebtedness.
For purposes of this Section 6.4, the "principal amount" or "amount" of a
lease under which the lessee is treated as the owner of the leased property for
tax purposes shall be determined as if such lease were a Capital Lease.
SECTION 1.55. LOANS, ADVANCES, INVESTMENTS.
(1) Make any loans or advances to, or otherwise acquire any
Indebtedness of, or acquire any equity interest or any option or warrant to
acquire any equity interest in, any Person (collectively, "Investments";
PROVIDED, HOWEVER, that the term "Investments" shall not include obligations
owed to Borrower or any Subsidiary by customers or suppliers arising from
Borrower's or such Subsidiary's payment, in the ordinary course of business, of
towing, storage and other expenses associated with services rendered by Borrower
or such Subsidiary, that are subject to "netting" arrangements that provide for
settlement of the net outstanding obligations between Borrower or such
Subsidiary and such customer or supplier when the net obligation owed by one to
the other reaches a specified level), other than:
(1) Permitted Investments;
(2) Investments in Subsidiaries (provided that if such
Subsidiary will meet the definition of "Guarantor" as a result of such
Investment, on or before the date of such Investment such Subsidiary has
executed and delivered to Agent a Subsidiary Guaranty; or
(3) the acquisition of the capital stock of a Person in a
transaction complying with Section 6.2(b) (and, if applicable, Section
6.2(a)); or
(2) without limiting the foregoing paragraph (a), organize any
Subsidiary unless, within five (5) Business Days after the incorporation or
other formation thereof:
(1) Borrower gives Agent written notice thereof, and
(2) if such Subsidiary meets the definition of "Guarantor",
Borrower causes such Subsidiary to execute and deliver to Agent a
Subsidiary Guaranty.
SECTION 1.56. DIVIDENDS AND DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on the stock of
Borrower or (except to Borrower or another Subsidiary) any Subsidiary now or
hereafter outstanding; nor redeem, retire, repurchase or otherwise acquire any
shares of any class of the stock of Borrower or any Subsidiary (other than such
as may be owned by Borrower or another Subsidiary), or any options, warrants or
other rights to acquire any such security, now or hereafter outstanding;
PROVIDED, HOWEVER, that (a) Borrower may pay dividends on its capital stock in
its own capital stock and (b) Borrower may pay dividends to its shareholders in
cash or repurchase shares of its outstanding capital stock
48
(collectively, "Cash Distributions"), PROVIDED that the aggregate amount of all
Cash Distributions paid on or after July 31, 2000, shall not exceed the lesser
of (x) that amount equal to fifty percent (50%) of Borrower's cumulative
retained earnings (such retained earnings to be determined as of the end of the
most recently completed fiscal quarter preceding each Cash Distribution and as
if no Cash Distributions had been paid since July 31, 2000, and (y) $50,000,000;
and PROVIDED FURTHER that (i) Borrower shall not declare any Cash Distribution
if, as of the date of declaration thereof, (A) any Default or Event of Default
has occurred and is continuing or (B) (determined as of the most recent
Quarterly Date, as if such Cash Distribution had been effected on such Quarterly
Date) would exist after giving effect thereto, and (ii) Borrower shall not
effect any Cash Distribution at any time that there has occurred and is
continuing any Default or Event of Default.
SECTION 1.57. LIENS. Create, incur, assume, suffer or permit to exist any
Lien on all or any portion of the assets of Borrower or any Subsidiary, real or
personal, now owned or hereafter acquired, except for (a) Liens required by this
Agreement or the other Loan Documents; (b) Liens (i) existing as of the date
hereof and (ii) disclosed in the Borrower Disclosure Letter; (c) Permitted Liens
described in clauses (i) through (v) of the definition of Permitted Liens; (d)
the Liens of lessors under Capital Leases or other leases constituting
Indebtedness entered into in compliance with Section 6.4 by the primary obligor;
(e) Liens, granted securing Indebtedness incurred by such Person in compliance
with Section 6.4(b), (f) and (i)(i) and complying with the requirements thereof;
(f) Liens on tangible assets (including nonmaterial accessions thereto) other
than inventory, and the proceeds thereof, that existed at the time such assets
were acquired by Borrower or any Subsidiary (including Liens on tangible assets
of any corporation that existed at the time it becomes a Subsidiary, PROVIDED
that such transaction is effected in compliance with Section 6.2); (g) Liens
(other than those described in any of the foregoing clauses of this Section 6.7)
(i) upon or in any tangible assets other than inventory) acquired or held by
Borrower or any Subsidiary in a transaction not prohibited by any provision of
this Article VI, and (ii) securing the purchase price of such assets or
Indebtedness, incurred solely for the purpose of financing the acquisition of
such asset, PROVIDED that the Indebtedness so secured is permitted, and is
permitted to be secured, under Section 6.4 and PROVIDED FURTHER that the Lien is
confined solely to the asset so acquired (and (x) in the case of real property,
related improvements and fixtures and the rents, issues and profits thereof, or
(y) in the case of equipment, nonmaterial accessions thereto) and proceeds
thereof; (g) Liens not otherwise permitted by the foregoing clauses of this
Section 6.7 or under the following clause (h) with respect to a Lien so
otherwise permitted, PROVIDED that the aggregate amount of the Indebtedness or
other obligations secured thereby does not exceed at any time $10,000,000; or
(h) Liens securing the extension, renewal or refinancing of the Indebtedness
secured by Liens (other than Liens identified in the Borrower Disclosure Letter
as to be satisfied) previously existing in compliance with this Section 6.7,
PROVIDED that such Lien is limited to the property theretofore encumbered by
such Lien and the principal amount of the Indebtedness so extended, renewed or
refinanced is not increased. For purposes of this Section 6.7, the "principal
amount" or "amount" of a lease under which the lessee is treated as the owner of
the leased property for tax purposes shall be determined as if such lease were a
Capital Lease.
SECTION 1.58. NO NEGATIVE PLEDGES. Enter into or suffer to exist, in favor
of any Person other than Agent and the Lenders, any agreement that prohibits or
conditions the creation or assumption of any Lien upon any of its property or
assets except those in favor of such Person if such
49
agreement would prohibit the granting of a security interest to Agent on behalf
of the Lenders as security for the Obligations of Borrower and any of the
Guarantors, except for limitations prohibiting or conditioning the creation or
imposition of Liens on property or assets subject to a consensual Permitted Lien
in favor of such Person.
SECTION 1.59. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the lease, purchase, sale, or exchange of real or
personal property or the rendering of any service, with any Affiliate, except
any such transaction which, considered together with any series of transactions
of which such transaction is a part, is upon fair and reasonable terms no less
favorable to Borrower or such Subsidiary than those which would obtain in a
comparable arm's-length transaction with a Person not an Affiliate, PROVIDED
that the foregoing shall not apply to compensation of employees, officers and
directors so long as a disinterested majority of the board of directors (or the
compensation committee of the board of directors) of Borrower (or the
Subsidiary, as the case may be) approves such compensation.
SECTION 1.60. CHANGE IN NATURE OF BUSINESS. Other than pursuant to a
Permitted Acquisition, engage in, or permit any of the Subsidiaries to engage
in, business other than the businesses engaged in on the Closing Date and any
businesses substantially similar, substantially related or incidental thereto;
PROVIDED, HOWEVER, that the primary business of Borrower and the Subsidiaries,
considered as a single enterprise, shall remain at all times the processing and
sale of vehicles, principally through auctions.
SECTION 1.61. PREPAYMENT. Other than with respect to the Credits hereunder,
prepay Indebtedness, including any Subordinated Debt, debt for borrowed money or
debt secured by any Permitted Lien, or any indebtedness in respect of any lease,
or enter into or modify any agreement the result of which is to advance any
scheduled payment date of such obligations in any fiscal year, in the aggregate
in excess of $10,000,000.
SECTION 1.62. SALE/LEASEBACKS. Enter into or suffer to exist any sale and
leaseback agreement covering any of its properties or assets, whether now owned
or hereafter acquired, pursuant to which Borrower or any Subsidiary will,
directly or indirectly, become or remain liable as a lessee or as a guarantor or
other surety unless the aggregate amount of all such Indebtedness outstanding at
any one time is $10,000,000 or less.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 1.63. EVENTS OF DEFAULT. The occurrence of any of the following
(for whatever reason, and whether voluntarily or involuntarily, by operation of
law or otherwise) shall constitute an "Event of Default" under this Agreement:
(1) Borrower, or any Guarantor, shall fail to pay:
50
(1) the outstanding principal of the Revolving Reducing Line of
Credit and other Obligations due and payable on the Maturity Date;
(2) the principal amount of any Advance due on any date other
than the Maturity Date when due (PROVIDED that such amount has continued
unpaid for at least five days after notice by Agent, if, as of the relevant
due date, adequate funds to pay such amount were not on deposit in the
deposit accounts subject to the automatic debit arrangement provided for
under Section 2.7(a));
(3) interest on any Advance, within five days after such
interest shall have become due (provided such amount has continued unpaid
for at least five days after notice by Agent, if, as of the relevant due
date, adequate funds to pay such amount were not on deposit in the deposit
accounts subject to the automatic debit arrangement provided for under
Section 2.7(a));
(4) any amount payable under any of Sections 2.12(b), 2.12(c),
2.12(d), 2.12(e), 2.13 and 2.14 when due; or
(5) any other amount payable by Borrower or any Guarantor under
this Agreement or any other Loan Document within thirty (30) days after
Borrower or Guarantor, as the case may be, shall have received notice from
Agent or the relevant Lender demanding payment thereof and setting forth in
reasonable detail the basis for demanding payment and the calculation of
the amount so payable.
(2) Any representation or warranty made by Borrower or any Guarantor
hereunder or under any other Loan Document shall fail to be true and correct in
all material respects when made or deemed made.
(3) Any default by Borrower or any Subsidiary in the performance or
observance of or compliance with any obligation, agreement or other provision
contained herein (other than those referred to in Section 7.1(a) or 7.1(b))
which by its nature cannot be cured or remedied, or which, if it can by its
nature be cured or remedied, shall continue uncured or unremedied, as the case
may be, for a period of thirty (30) days after a Responsible Officer first
becomes aware (or should have become aware) of such default (whether by notice
from Agent or otherwise).
(4) (i) (A) Any default in the payment by Borrower or any Subsidiary
when due of any amount due under any Indebtedness (whether by acceleration or
otherwise) to any Person if such default continues uncured beyond the expiration
of any applicable grace or cure period(s), or (B) any default other than a
payment default by Borrower or any Subsidiary under any Indebtedness if the
effect of such default is to accelerate such Indebtedness, or to give the
holders of such Indebtedness, or any trustee or other representative thereof,
the right to accelerate the Indebtedness, and (ii) the amount of such
Indebtedness exceeds (A) in any instance, $3,000,000, or (B) in the aggregate,
$5,000,000.
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(5) Any default, whether or not involving the payment of money, under
any operating lease or other obligation of Borrower or any Subsidiary not
constituting Indebtedness, if as a result thereof such operating lease or
obligation is accelerated or terminated, and the aggregate payments due in
respect of such acceleration or termination exceed (i) in any instance,
$3,000,000, or (ii) in the aggregate, $5,000,000.
(6) Any default in the performance by Borrower or any Guarantor of
any obligation, or any defined event of default, under any of the Loan Documents
other than this Agreement, which by its nature cannot be cured or remedied, or
which, if it can by its nature be cured or remedied, shall continue uncured or
unremedied, as the case may be, for a period of thirty (30) days after a
Responsible Officer first becomes aware (or reasonably should have become aware)
of such default (whether by notice from Agent or otherwise).
(7) The filing of a notice of judgment lien against Borrower or any
Subsidiary; or the recording of any abstract of judgment against Borrower or any
Subsidiary in any county in which Borrower or such Subsidiary has an interest in
real property; or the service of a notice of levy or of a writ of attachment or
execution, or other like process, against the assets of Borrower or any
Subsidiary; or the entry of a judgment against Borrower or any Subsidiary; in
each case, with respect to an obligation to pay money of in excess of $250,000,
and which shall (i) have remained unsatisfied and in effect for sixty (60)
consecutive days without having being vacated, discharged or satisfied, or
stayed or bonded pending appeal or (ii) resulted in a notice of intended sale
having been delivered in respect of any properties or assets of Borrower or any
Subsidiary.
(8) Borrower or any Guarantor shall become insolvent, or shall suffer
or consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; or Borrower or any Guarantor shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Code, or
under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or any Guarantor and remains undismissed for a period of sixty
(60) consecutive days; or Borrower or any Guarantor shall file an answer
admitting the jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any Guarantor shall be adjudicated a
bankrupt, or an order for relief shall be entered by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.
(9) The dissolution or liquidation of Borrower; or Borrower or its
directors or stockholders shall take action seeking to effect the dissolution or
liquidation of Borrower.
(10) (i) Any material provision of any Loan Document shall cease to be
in full force and effect, or Borrower or any Guarantor shall disclaim any
liability thereunder or purport to revoke such Loan Document; or (ii) any
Obligation (or any obligation of any Guarantor under any
52
Loan Document) shall be subordinated to any other obligation of Borrower or any
Guarantor, for any reason.
(11) Borrower shall fail to pay when due an amount or amounts
aggregating in excess of $3,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
Unfunded Pension Liabilities in excess of $3,000,000 shall be filed under Title
IV of ERISA, or the PBGC shall institute proceedings under Title IV of ERISA to
terminate a Plan or Plans, having aggregate Unfunded Pension Liabilities in
excess of $3,000,000 or a proceeding shall be instituted by a fiduciary of any
such Plan or Plans against any such person to enforce Section 515 of ERISA to
collect contributions in excess of $3,000,000; or a condition shall exist by
reason of which the PBGC would be entitled under Section 4042 of ERISA to obtain
a decree adjudicating that a Plan or Plans having aggregate Unfunded Pension
Liabilities in excess of $3,000,000 must be terminated.
(12) The occurrence of a Material Adverse Effect, or the determination
by all of the Lenders that one or more conditions exist or events have occurred
that is reasonably likely to result in a Material Adverse Effect.
(13) The occurrence of a Change in Control.
SECTION 1.64. REMEDIES. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Section 7.1(h)) and at
any time thereafter during the continuance of such Event of Default, Agent may,
with the consent of the Majority Lenders, or shall, upon instructions from the
Majority Lenders, by written notice to Borrower, (a) terminate the obligations
of the Lenders to make Advances under the Revolving Reducing Line of Credit and
to issue Letters of Credit under the Letter of Credit Facility, or (b) declare
all indebtedness of Borrower under the Loan Documents to be immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything in the Loan Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Section 7.1(h), immediately and without notice, (i) the
obligations, if any, of the Lenders to extend any further credit hereunder
(including in respect of the Swing Line) shall automatically cease and
terminate, and (ii) all indebtedness of Borrower under the Loan Documents shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Notes to the contrary
notwithstanding. In addition to the foregoing remedies, upon the occurrence or
existence of any Event of Default, Agent may exercise any other right, power or
remedy granted to it or the Lenders under any Loan Document or permitted to it
or the Lenders by law, either by suit in equity or by action at law, or both, or
as otherwise permitted under applicable law. Immediately after taking any action
under this Section 7.2, Agent shall notify each Lender of such action.
ARTICLE VIII
THE AGENT AND RELATIONS AMONG LENDERS
53
SECTION 1.65. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent under the Loan
Documents with such powers as are expressly delegated to Agent by the terms of
the Loan Documents, together with such other powers as are reasonably incidental
thereto. Agent shall not have any duties or responsibilities except those
expressly set forth in any Loan Document, and Agent shall neither be a trustee
for any lender nor have any fiduciary duty to any Lender. No implied covenants,
functions, responsibilities, duties or obligations shall be read into any Loan
Document or otherwise exist against Agent. Notwithstanding anything to the
contrary contained herein, Agent shall not be required to take any action which
is contrary to any Loan Document or applicable law. Neither Agent nor any Lender
shall be responsible to any other Lender for any recitals, statements,
representations or warranties made by Borrower contained in any Loan Document,
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any Loan Document or (if applicable) any collateral at any time
hereafter securing the Obligations or the obligations of any Guarantor or for
any failure by Borrower or any Guarantor to perform its respective obligations
hereunder or thereunder. Agent may employ agents and attorneys-in-fact and shall
not be responsible to any Lender for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it with reasonable care. Neither Agent
nor any of its directors, officers, employees or agents shall be responsible to
any Lender for any action taken or omitted to be taken by it or them under any
Loan Document or in connection therewith, except for its or their own gross
negligence or wilful misconduct. Except as otherwise provided under this
Agreement, Agent shall take such action with respect to the Loan Documents as
shall be directed by the Majority Lenders.
SECTION 1.66. RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telecopy,
or telex) or conversation believed by it in good faith to be genuine and correct
and to have been signed, sent or made by or on behalf of the proper person or
persons, and upon advice and statements of legal counsel (including counsel to
Borrower), independent accountants and other experts selected by Agent with
reasonable care. As to any matters not expressly provided for by this Agreement,
Agent shall not be required to take any action or exercise any discretion, but
shall be required to act or to refrain from acting upon instructions of the
Majority Lenders and shall in all cases be fully protected by the Lenders in
acting, or in refraining from acting, hereunder or under any other Loan Document
in accordance with the instructions of the Majority Lenders, and such
instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
SECTION 1.67. DEFAULTS. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless Agent has received a notice from a
Lender or Borrower, referring to this Agreement, describing such Default, and
stating that such notice is a "Notice of Default"; PROVIDED, HOWEVER, that Agent
shall be deemed to have knowledge and notice of a Default if Agent, in its
capacity as a Lender, has knowledge or notice of such Default. If Agent receives
such a notice of the occurrence of a Default, Agent shall give prompt notice
thereof to the Lenders. Subject to Section 9.4 and to the fourth sentence of
Section 8.1, Agent shall take such action with respect to such Default as shall
be directed by the Majority Lenders; PROVIDED, HOWEVER, that until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default as
may be reasonably necessary to prevent the material impairment of the Lenders'
collateral (if any) or the Lenders' rights; PROVIDED, FURTHER, that
54
Agent shall not, without the direction of Majority Lenders, institute any legal
proceedings against Borrower or any other Person to enforce any of the Lenders'
rights or remedies under the Loan Documents.
SECTION 1.68. INDEMNIFICATION. Without limiting the obligations of Borrower
or any Guarantor hereunder or under any other Loan Document, each Lender agrees
to indemnify Agent, ratably in accordance with its Proportionate Share, for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time (including at any time following payment of
such obligations) be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of this Agreement or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof or of any such
other documents or any action taken or omitted by Agent under or in connection
herewith or therewith; PROVIDED, HOWEVER, that no Lender shall be liable for any
of the foregoing to the extent they arise from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly on demand for its ratable share of any amounts payable
but not paid by Borrower under Section 9.2. Agent shall be fully justified in
refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by Agent by reason of taking or
continuing to take any such action. The agreements in this Section 8.4 shall
survive the payment of the Obligations.
SECTION 1.69. NON-RELIANCE. Each Lender represents that it has,
independently and without reliance on Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the financial condition and affairs of
Borrower and decision to enter into this Agreement. Each Lender agrees that it
will, independently and without reliance upon Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. Each Lender acknowledges that Agent has not made
any representation or warranty to it with respect to the financial condition or
affairs of Borrower, this Agreement, any other Loan Document or any collateral
for the Obligations or for the obligations of any Guarantor, and that no act by
Agent hereafter, including any review of any of such matters, shall be deemed to
constitute any such representation or warranty by Agent to any Lender. Neither
Agent nor any Lender shall be required to keep informed as to the performance or
observance by Borrower or any Guarantor of the respective obligations of
Borrower and the Guarantors under this Agreement or any other document referred
to or provided for herein or to make inquiry of, or to inspect the properties or
books of Borrower or any Guarantor. Except for reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder, neither Agent nor any Lender shall have any duty or responsibility to
provide any Lender with any credit or other information concerning Borrower or
any Guarantor which may come into the possession of Agent or of such Lender, or
of any of its or their respective affiliates.
SECTION 1.70. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, Agent may resign at any
time by giving thirty (30) days' notice thereof to the Lenders, and Agent may be
removed at any time with or
55
without cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been appointed by the Majority Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or the Majority Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a Financial Institution having a combined
capital, surplus and retained earnings of not less than U.S. $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all, the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VIII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
SECTION 1.71. AUTHORIZATION. Agent is hereby authorized by the Lenders to
execute, deliver and perform each of the Loan Documents to which Agent is or is
intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Loan Documents.
SECTION 1.72. AGENT IN ITS INDIVIDUAL CAPACITY. Agent and its affiliates
may make loans to, accept deposits from, own securities of and generally engage
in any kind of business with Borrower, as though Agent were not Agent hereunder,
without any duty to give notice thereof or account therefor to any Lender. Xxxxx
Fargo as a Lender shall have the same rights and powers under this Agreement and
the other Loan Documents as any other Lender and may exercise the same as though
it were not Agent, and the terms "Lender" or "Lenders" shall include Xxxxx Fargo
in each such capacity.
ARTICLE IX
MISCELLANEOUS
SECTION 1.73. NOTICES. Except as specified otherwise herein, any
communications between or among the parties hereto or notices or requests
required herein to be given must be in writing and shall be deemed given or made
when personally delivered, or when received if sent by telecopy or cable, or
upon the earlier of the date of receipt or three (3) days after deposit in the
U.S. mail, first class and postage prepaid, addressed to Borrower at the
following address or telecopy number:
BORROWER: Copart, Inc.
0000 Xxxx 0xx Xxxxxx, 0xx Xxxxx
Xxxxxxx,, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Senior Vice President
and Chief Financial Officer
Telecopier: (000) 000-0000
56
with a copy to: Xxxx X. Xxxxx, Esq., Senior Vice President
and General Counsel,
at the same address;
and to Agent and each Lender at its address or telecopy number set forth as
the "Address for Notices" for Agent or such Lender in SCHEDULE I hereto, or at
such other address or telecopy number as any party may in writing hereafter
indicate by written notice to all other parties.
SECTION 1.74. EXPENSES. Borrower shall pay immediately upon demand (a) all
reasonable costs, fees and expenses, including reasonable attorneys' fees and
expenses, incurred by Agent and the Lenders in connection with the preparation,
review, execution and delivery of, and the exercise of its duties under, this
Credit Agreement and the other Loan Documents, and the preparation of amendments
and waivers hereunder and thereunder; (b) all reasonable costs, fees and
expenses, including reasonable attorneys' fees and expenses, incurred by the
Lenders or Agent in connection with the enforcement, preservation or protection
(or attempted enforcement, preservation or protection) of any rights or remedies
of the Lenders or Agent under this Agreement or any other Loan Document
(including in connection with any "workout" or restructuring relating to this
Agreement, any Credit, or any bankruptcy or insolvency case involving Borrower
or any Guarantor; and (c) all reasonable costs, fees and expenses incurred by
Agent and the Lenders for appraisals, audits, environmental inspections and
reviews, searches and filings in connection with any of the foregoing; PROVIDED,
HOWEVER, absent the existence of a Default or the making of a specific request
by Borrower regarding the interpretation, amendment or modification of, or any
waiver or consent under, any Loan Document, or the permissibility thereunder of
a particular act or occurrence, Borrower shall not be required to pay Agent's or
the Lenders' costs, fees and expenses incurred in administering the Credits. As
used herein, the term "reasonable attorneys' fees and expenses" shall include,
without limitation, reasonable allocable costs and expenses of the Lenders' and
Agent's in-house legal counsel and staff, and "reasonable costs, fees and
expenses" shall include, without limitation, reasonable allocable costs, fees
and expenses of the Lenders' and Agent's internal appraisal, audit,
environmental and other similar services, and reasonable fees and disbursements
of expert witnesses and other consultants.
SECTION 1.75. INDEMNIFICATION. To the fullest extent permitted by law,
Borrower hereby agrees to protect, indemnify, defend and hold harmless each of
the Lenders, Agent, and their respective affiliates and each of their and their
respective affiliates' respective past and present officers, directors,
shareholders, employees, agents, attorneys, affiliates, successors and assigns,
together with their respective heirs, beneficiaries, executors, administrators,
trustees, predecessors, successors and assigns (collectively, "Indemnitees")
from and against any liabilities, losses, damages or expenses of any kind or
nature and from any suits, claims or demands (including in respect of or for
reasonable attorneys' fees and other expenses, including the allocated costs and
expenses of internal counsel) arising on account of or in connection with any
matter or thing or action or failure to act by Indemnitees, or any of them,
arising out of or relating to this Agreement, any other Loan Document, including
without limitation any use by Borrower of any proceeds of any Credit, except to
the extent such liability arises from the willful misconduct or gross negligence
of the Indemnitees. It shall not be a condition to any such indemnification that
Agent or any Lender (or any other
57
Indemnitee) be a party to any such investigation, litigation or other
proceeding. Without limiting the generality of the foregoing, Borrower will
indemnify Agent, and each Lender and each other Indemnitee from, and hold each
of them harmless against, any losses, liabilities, damages or expenses described
in the preceding provisions (but excluding, as provided in the preceding
provisions, any loss, liability, damage or expense incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified) arising
under any Environmental Law as a result of the past, present or future
operations of Borrower or any of its Subsidiaries (or any predecessor in
interest to Borrower or any of its Subsidiaries), or the past, present or future
condition of any site, facility or vessel owned, operated or leased by Borrower
or any of its Subsidiaries (or any such predecessor in interest), or any release
or threatened release of any Hazardous Materials from any such site or facility,
including any such release or threatened release which shall occur during any
period when Agent or any Lender shall be in possession of any such site,
facility or vessel following the exercise by Agent or any Lender of any of its
rights and remedies under any Loan Document. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Agent or any Lender
believes is covered by this indemnity, Agent or such Lender shall give Borrower
notice of the matter and an opportunity to defend it, at Borrower's sole cost
and expense, with legal counsel satisfactory to Agent or such Lender, as the
case may be. Agent or such Lender may also require Borrower to defend the
matter. Any failure or delay of Agent or any Lender to notify Borrower of any
such suit, claim or demand shall not relieve Borrower of its obligations under
this Section 9.3 but shall reduce such obligations to the extent of any increase
in those obligations caused solely by an unreasonable failure or delay in
providing such notice. The obligations of Borrower under this Section 9.3 shall
survive the payment in full and performance of all of the Obligations.
SECTION 1.76. WAIVERS, AMENDMENTS. Any term, covenant, agreement or
condition of this Agreement or any other Loan Document may be amended if such
amendment is in writing and is signed by Borrower and Majority Lenders, and any
term, covenant, agreement or condition of this Agreement or any other Loan
Document may be waived if such waiver is in writing and is signed by Borrower
and (for so long as Xxxxx Fargo is Agent) Agent; PROVIDED, HOWEVER, that (a) any
waiver of a Default under (i) any of Sections 5.1, 6.1 and 6.2, or (ii) any of
Section 5.3 (a), 5.3(b) and 5.3(c) that involves a failure to deliver the
financial information required to be delivered pursuant thereto more than thirty
(30) days after the date it initially becomes due thereunder, or (iii) any of
Sections 6.3, 6.5, 6.6, 6.7 and 6.8 that involves an amount in excess of
$1,000,000, or (iv) Section 6.10, if such Default is material, may be effected
only with the written consent of Majority Lenders; (b) any amendment, waiver or
consent which affects the rights or duties of (i) Agent must be in writing and
be signed also by Agent and (ii) Xxxxx Fargo in its capacity as the Swing Line
Lender must be in writing and be signed also by Xxxxx Fargo acting in such
capacity; and (c) any amendment, waiver or consent which effects any of the
following changes must be in writing and be signed also by all the Lenders:
(1) increases the Maximum Principal Amount or the maximum Letter
of Credit Exposure set forth in Section 2.3(a);
(2) extends the Maturity Date or the permissible term of any
Letter of Credit;
58
(3) reduces (A) the principal of, or interest (including default
rate interest) on, any Advance, or (B) any fees or other amounts payable
for the account of the Lenders;
(4) postpones or conditions any date fixed for any payment of
the principal of, or interest on, any Advance or any fees or other amounts
payable for the account of any of the Lenders;
(5) waives or amends Section 5.6;
(6) waives or amends this Section 9.4;
(7) amends the definition of Majority Lenders;
(8) results in a release of any substantial part of any
collateral at the time securing all or any portion of the Obligations;
(9) increases or decreases the Proportionate Share of any Lender
in the Total Commitments (other than through an assignment under Section
9.5); or
(10) waives or amends Section 6.2(b)(ii).
No failure or delay by Agent or the Lenders in exercising any right
hereunder shall operate as a waiver thereof or of any other right, nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 1.77. SUCCESSORS AND ASSIGNS.
(1) BINDING EFFECT. The Loan Documents shall be binding upon and
inure to the benefit of Borrower, Guarantors, the Lenders, Agent, all future
holders of the Notes and their respective successors and permitted assigns,
except that neither Borrower nor any Guarantor may assign or transfer any of its
rights or obligations under any Loan Document without the prior written consent
of Agent and each Lender. All references in this Agreement to any Person shall
be deemed to include all successors and assigns of such Person.
(2) PARTICIPATIONS. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
Financial Institutions ("Participants") participating interests in any Credit
owing to such Lender, any Note held by such Lender, or any other interest of
such Lender under this Agreement and the other Loan Documents. In the event of
any such sale by a Lender of a participating interest to a Participant, (i) such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible for the
performance thereof, (iii) such Lender shall remain the holder of any such Note
for all purposes under this Agreement, and (iv) Borrower and the Guarantors and
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's
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rights and obligations under this Agreement. Participants shall have no rights
under this Agreement or any other Loan Document except as provided below. No
Lender shall sell any participating interest under which the Participant shall
have any rights to vote on any amendment or waiver of this Agreement or any
other Loan Document; PROVIDED, HOWEVER, that any agreement pursuant to which any
Lender sells a participating interest to a Participant may require the selling
Lender to obtain the consent of such Participant in order for such Lender to
agree in writing to any amendment of a type specified in Sections 9.4(c)(i)
through 9.4(c)(ix). No agreement pursuant to which any Lender sells a
participating interest to a Participant other than a Lender may permit the
participant to transfer, pledge, assign, sell participations in or otherwise
encumber its participating interest. Borrower agrees that if amounts outstanding
under this Agreement and the other Loan Documents are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall, to the fullest extent permitted by
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any other Loan Documents to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any other Loan Documents;
PROVIDED, HOWEVER, that such rights of setoff shall be subject to the obligation
of such Participant to share with the Lenders, and the Lenders agree to share
with such Participant, as provided in Section 2.10(b). Borrower also agrees that
any Lender which has transferred all or part of its interests in the Credits to
one or more Participants shall, notwithstanding any such transfer, be entitled
to the full benefits accorded such Lender under Sections 2.13 and 2.15, as if
such Lender had not made such transfer.
(3) ASSIGNMENTS. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time, sell and assign to
any Lender or any other Financial Institution (individually, and obligations an
"Assignee") all or any portion of its rights under this Agreement and the other
Loan Documents (such a sale and assignment to be referred to herein as an
"Assignment") pursuant to an Assignment and Assumption Agreement in the form of
EXHIBIT E attached hereto (an "Assignment Agreement"), executed by each Assignee
and such assignor Lender (an "Assignor") and delivered to Agent for its
acceptance and recording in the Register; PROVIDED, HOWEVER, that:
(1) each Assignment shall be in a minimum amount of $3,000,000;
and
(2) without the written consents of Agent and each other Lender,
and (so long as no Default or Event of Default then exists) of Borrower,
which consents shall not be unreasonably withheld, no Lender may make any
Assignment to any Assignee which is not, immediately prior to such
Assignment, a Lender hereunder or an affiliate thereof.
Upon the execution, delivery, acceptance and recording of each Assignment
Agreement , from and after the effective date set forth therein, (A) each
Assignee thereunder shall be a Lender hereunder with a Proportionate Share as
set forth in Section 1 of such Assignment Agreement and shall have the rights,
duties and obligations of such a Lender under this Agreement and the other Loan
Documents, and (B) the Assignor thereunder shall be a Lender with a
Proportionate Share as set forth in Section 1 of such Assignment Agreement, or,
if the Proportionate Share of the Assignor has been reduced to 0%, the Assignor
shall cease to be a Lender; PROVIDED, HOWEVER, that each Assignor shall
nevertheless be entitled to the indemnification rights contained in Section 9.3
for any
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events, acts or omissions occurring before the effective date of its Assignment.
Each Assignment Agreement shall be deemed to amend SCHEDULE I hereto to the
extent necessary to reflect the addition of each Assignee and the resulting
adjustment of Proportionate Shares arising from the purchase by each Assignee of
all or a portion of the rights and obligations of an Assignor under this
Agreement and the other Loan Documents. On or prior to the effective date of any
Assignment, Borrower, at its own expense, shall execute and deliver to Agent, in
exchange for the surrendered Note of the Assignor thereunder, a new Note to the
order of the Assignee thereunder (with each new Note to be in an amount equal to
the commitment assumed by such Assignee) and, if the Assignor has retained a
commitment hereunder, a new Note to the order of the Assignor (with the new Note
to be in an amount equal to the commitment retained by the Assignor), and
otherwise in the form of the Note replaced thereby. Any Note surrendered by the
Assignor shall be returned by Agent to Borrower marked "Exchanged".
(4) REGISTER. Agent shall maintain at Agent's Office a copy of
each Assignment Agreement delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Proportionate
Shares of each Lender from time to time. The entries in the Register shall be
conclusive in the absence of manifest error, and Borrower, Agent and the Lenders
may treat each entity whose name is recorded in the Register as the owner of the
Proportionate Shares recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(5) REGISTRATION. Upon its receipt of an Assignment Agreement
executed by an Assignor and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate of a Lender, by Borrower and Agent.) together
with payment by such Assignee to Agent of a registration and processing fee of
$5,000, Agent shall (i) promptly accept such Assignment Agreement, and (ii) on
the effective date of such Assignment record the information contained therein
in the Register and give notice of such acceptance and recordation to the
Lenders and Borrower. Agent may, from time to time at its election, prepare and
deliver to the Lenders and Borrower a revised SCHEDULE I reflecting the names,
addresses and respective Proportionate Shares of all Lenders then parties
hereto.
(6) CONFIDENTIALITY. Each of Agent and the Lenders understands
that some of the information and documents furnished to it pursuant to this
Agreement or the other Loan Documents may be confidential, and agrees that it
will keep all non-public information, documents and agreements so furnished to
it confidential and will make no disclosure to other Persons of such information
or agreements until it shall have become public, except (i) to the extent
required in connection with matters involving operations under or enforcement or
amendment of the Loan Documents; (ii) in accordance with Agent's or such
Lender's obligations under law or regulations or pursuant to subpoenas or other
legal process to make information available to governmental agencies and
examiners or to others; (iii) to any corporate parent or (if such affiliate is a
Financial Institution) other affiliate of Agent or such Lender so long as such
parent or other affiliate agrees to accept such information or agreement subject
to the restrictions provided in this Section 9.5(f); (iv) to any participant
bank or trust company of Agent or such Lender that agrees to keep such
information, documents or agreement confidential in accordance with the
restrictions provided in this Section
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9.5(f); (v) to Agent or to any other Lender and such Lender's, Agent's and such
other Lenders' respective counsel and other professional advisors so long as
such Persons are instructed to keep such information confidential in accordance
with the provisions of this Section 9.5(f); (vi) to proposed Assignees and
Participants that are Financial Institutions and that agree to keep such
information, documents or agreements confidential in accordance with the
restrictions provided in this Section 9.5(f); or (vii) with the prior written
consent of Borrower.
SECTION 1.78. SETOFF. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, with the prior consent of
Agent but without prior notice to Borrower, any such notice being expressly
waived by Borrower to the extent permitted by applicable law, upon the
occurrence and during the continuance of an Event of Default, to set off and
apply against any indebtedness, whether matured or unmatured, of Borrower to
such Lender, any amount owing from such Lender to Borrower, at or at any time
after the happening of any of the above mentioned events, and, as security for
such indebtedness, Borrower hereby grants to each Lender a continuing security
interest in any and all deposits, accounts or moneys of Borrower then or
thereafter maintained with such Lender, subject in each case to Section 2.10(b).
The aforesaid right of set-off may be exercised by such Lender against Borrower
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
Borrower or against anyone else claiming through or against Borrower or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of a Default or Event of
Default. Each Lender agrees promptly to notify Borrower after any such set-off
and application made by such Lender, PROVIDED that the failure to give such
notice shall not affect the validity of such set-off and application.
SECTION 1.79. ENTIRE AGREEMENT, AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement among Borrower, Agent and the
Lenders with respect to the Credits and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof.
SECTION 1.80. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other Person shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with this Agreement or any other of the Loan Documents to
which it is not a party.
SECTION 1.81. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 1.82. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
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SECTION 1.83. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF
CALIFORNIA, PROVIDED THAT AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
SECTION 1.84. SUBMISSION TO JURISDICTION. SUBJECT TO SECTION 9.13: (i) ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT SOLELY IN THE COURTS OF THE STATE OF CALIFORNIA OR OF
THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND, BY EXECUTION AND
DELIVERY HEREOF, EACH OF BORROWER AND AGENT AND THE LENDERS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS; (ii) EACH
OF BORROWER AND AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF BORROWER AND AGENT AND THE LENDERS WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY CALIFORNIA LAW.
SECTION 1.85. WAIVER OF JURY TRIAL. EACH OF BORROWER, AGENT AND THE
LENDERS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRAIL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR
OTHER LITIGATION IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS OR EVENTS REFERENCED
HEREIN OR THEREIN OR CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR ANY OTHER OF THE LOAN DOCUMENTS. A COPY OF THIS SECTION 9.13 MAY BE FILED
WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY
AND THE CONSENT TO TRIAL BY COURT.
SECTION 1.86. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
SECTION 1.87. AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT. As of the
Closing Date, this Agreement shall amend and restate the Existing Credit
Agreement, but without prejudice to the rights of Xxxxx Fargo, U.S. Bank
National Association and Fleet National Bank under Section 9.3 of the Existing
Credit Agreement or to the rights of Xxxxx Fargo under Section 8.4 of the
Existing Credit Agreement, each of which shall remain in full force and effect
and is hereby incorporated into this Agreement by reference.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
BORROWER: AGENT:
COPART, INC., a California corporation XXXXX FARGO BANK, NATIONAL
ASSOCIATION, in its capacity as Agent
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
LENDERS:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:__________________________________
Title:_______________________________
U.S. BANK NATIONAL ASSOCIATION
By:__________________________________
Title:_______________________________
FLEET NATIONAL BANK
By:__________________________________
Title:_______________________________
